SASKATOON, May 3, 2005 -- High global demand for potash and uranium is expected to strongly offset Saskatchewan's declining exports of grains, oilseeds and live cattle in 2005 and its export growth is projected to more than double the national average of 3 per cent, according to a provincial export outlook from Export Development Canada (EDC). "There are many positives on Saskatchewan's export horizon for 2005," says EDC Senior Vice-President and Chief Economist Stephen Poloz. "Asia's sustained demand for fertilizer and worldwide appetite for nuclear technology as a low-emission energy source are helping Saskatchewan's mineral sector outshine agri-food exports. Even crude oil output, which is to remain relatively flat, will increase the value of energy exports due to high oil prices," added Mr. Poloz. Still, overall export growth will be slower than in 2004. "The outlook calls for Saskatchewan's exports to increase by 8 per cent in 2005, which makes for a very comfortable slowdown when compared to the 3 percent projected nationally," said Mr. Poloz. Much of the 18 per cent export growth recorded in 2004 was attributed to a 46 per cent crop production increase during the 2003 growing season, which boosted carry-over inventories into 2004. Even though the 2004 harvest was still 17 per cent higher than in 2003, it was lower in value. The 2005 production of grains and oilseeds in Western Canada is expected to be lower, which will impact exports in the second half of 2005 and into 2006. As well, world wheat prices are expected to decrease in 2005 and 2006 due to increased world supplies relative to demand. Prices for Canadian wheat and durum are also expected to decrease, partly due to the strength of the Canadian dollar. For the cattle industry, prolonged delays in reopening of the U.S.-Canada border to cattle under 30 months of age are still hurting Saskatchewan's live animal exporters. "On the bright side, exports of boneless beef products from cows younger than 30 months have rebounded and should continue to register gains," said Mr. Poloz. Hog producers are also reaping benefits as U.S. consumers switch to less expensive meat products in the U.S., a reaction to high beef prices. Overall, exports of meat and meat products are projected to grow by 14 per cent in 2005 and by 16 per cent in 2006. Fertilizer demand is expected to correspond to strong global demand for crop production, particularly in China and Southeast Asia. In the U.S., fertilizer demand will climb as record U.S. corn and soybean production increases the rate of soil nutrient removal. "Higher farm incomes in the U.S. will allow farmers in that country to finance new fertilizer purchases - a development that should give Canada's fertilizer industry a chance to grab a significant share of growth in global demand," said Mr. Poloz. Saskatchewan's industrial goods, which range from primary to intermediate goods, account for almost a quarter of the province's exports. This sector is projected to grow by 13 per cent in 2005 and 6 per cent in 2006, led by metals and minerals (which include potash and uranium) and chemicals. As the world's largest producer and exporter of potash and uranium, Saskatchewan is in an ideal position to capitalize on strong global demand for these materials. Uranium production is planned to expand at the McArthur River mine due to higher global demand. Production hit a record high at this site during the last three months of 2004. Uranium prices in 2004 increased by over 40 per cent due to tight supplies. "We expect the price of uranium to remain high over the next few years, as many utilities are turning to nuclear technology to reduce emissions," explained Mr. Poloz. The province's energy exports are forecast to grow by 14 per cent in 2005, as high energy prices encourage the sector's expansion. But lower oil prices are expected to exert downward pressure on the value of energy exports in 2006. Saskatchewan's energy exports are almost wholly made up of oil, followed by smaller amounts of coal and electricity. "The downside risks to the forecast are a further appreciation to the Canadian dollar, lower energy prices and adverse weather conditions further impacting crop production," noted Mr. Poloz, "but on the other hand, any early lifting of the U.S. ban on Canadian cattle introduces some upside to this forecast." Nationally, the economy is expected to grow by 2.4 and 2.9 per cent in 2005 and 2006, based on good domestic economic fundamentals. In turn, Canada's export volumes should grow by 3 per cent in both 2005 and 2006. A copy of EDC's Global Export Forecast is available on EDC's web site: http://www.edc.ca/docs/ereports/gef/EFindex_e.htm EDC is a Crown corporation that provides trade finance and risk management services to Canadian exporters and investors in up to 200 markets worldwide. -30- Media Contact : Glen Nichols EDC-Public Affairs Telephone: (613) 598-2876 E-mail: glnichols@edc.ca
