SASKATOON – The devalued peso may make it harder for Canadians to sell canola to Mexico, says the manager of planning and development for XCAN Grain.
Canadians are selling canola into Mexico at a premium price compared to sunflower and soybeans, said Dale Adolphe of XCAN Grain Pool Ltd., the marketing arm of the three prairie pools.
“The premium gets magnified with the devaluation of the peso,” he said.
In December, the peso dropped more than 30 percent in value next to the American dollar. But because the Canadian dollar is also worth 30 percent less than the American dollar, Canadian exporters don’t have to worry about getting bumped from the market by the Americans.
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“We are very competitive with the U.S. because of the cheap Canadian dollar,” said Adolphe.
But with the lowered peso Mexicans will be searching for the cheapest alternative and may turn to South American crops.
“Mexico is a pretty important market for canola.”
From August 1993 to July 31, 1994, Canada sold 430,000 tonnes of canola to Mexico. It also sold about 900,000 tonnes of wheat during the same time.
Wheat won’t be lowered
Deanna Allen, information officer with the Canadian Wheat Board, said sales of wheat to Mexico haven’t slipped since the peso fell and the board doesn’t expect to drop its price to maintain sales.
“We’re not going to devalue our prices just to make our sales. They’re going to be needing wheat. It’s just whether they’ll meet the price,” said Allen, of Winnipeg.
Jim Morris, general manager of SPI Marketing Group, Sask-atchewan’s pork marketing board, said the board is watching the Mexican market daily for signs of dropping pork consumption.
Meat, including pork, may be one of the things Mexicans drop from their diet because of the now-higher cost of imported food. Mexico is not self-sufficient in pork and buys from Europe, Canada and the United States.
“It’s a bit of a question whether Mexican consumers continue to afford pork at higher prices than they had,” said Morris.
Saskatchewan ships about $250,000 worth of pork to Mexico each week. Saskatchewan exports account for about half of all Canadian pork exported to Mexico.
