(SASKATOON) – May 8, 2009 – Saskatchewan’s exports are forecast to decline by 37 per cent in 2009 before rebounding by 14 per cent in 2010, according to a provincial export outlook by Export Development Canada (EDC).
"Having benefited strongly from buoyant commodity prices, Saskatchewan’s exports are swiftly shifting gear," said Peter Hall, Chief Economist of EDC.
“While Saskatchewan boasts a well diversified commodity base, the province faces a near-term squeeze on its foreign sales. This is owing to the synchronized price correction in play across commodities everywhere, but also as a function of intentional curtailing of production in the province.”
Saskatchewan’s energy sector exports, accounting for 40 per cent of the province’s exports overall, are forecast to drop by 46 per cent in 2009 before rebounding with a price-induced lift of 16 per cent in 2010.
Weak pricing in oil markets will be compounded by a 3 per cent decline in the province’s production output in 2009, and EDC expects volumes to be flat in 2010. As oil and gas exploration loses steam and drilling activity shrinks at double-digit rates, the forecast for medium-term production is increasingly subdued.
The agrifood sector accounts for 31 per cent of the province’s overall export picture, and is expected to decline by 22 per cent in 2009 before rebounding by 7 per cent in 2010.
While exports of this season’s large wheat crop are set to remain strong through mid-year, the increase in volumes will not offset an estimated 36 per cent year-over-year price decline.
Weak global feed demand and the associated price incentive for farmers are likely to reduce new plantings of the grain, limiting a potential increase in exports into 2010. The record canola supplies of 2008/2009 will not offset the dampening effects of weak pricing in 2009, but modest gains in both export volumes and prices are expected to boost exports by 12 per cent in 2010.
Depressed consumer demand for red meats and the implementation of Mandatory Country of Origin Labelling in the US will lead to both pricing and volume weakness in Saskatchewan’s livestock industry. Cattle herd reductions have been more pronounced in Saskatchewan that than in neighbouring provinces.
The recent reopening of the Jordanian and Saudi markets to Canadian beef could offer a glimmer of improved demand moving forward.
Canadian exports are forecast to decline by 22.2 per cent in 2009 before rebounding by 7.4 per cent in 2010. Nationally, economic growth is expected to decline by 2 per cent in 2009 with a slight increase of 1.7 per cent in 2010. Internationally, EDC is forecasting a 1.3 per cent decline in 2009 and 2.3 per cent increase in 2010 in global GDP. EDC’s Global Export Forecast is available at http://www.edc.ca/gef.
EDC is Canada’s export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC’s knowledge and partnerships are used by more than 8,300 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining, a recognized leader in financial reporting and economic analysis, and has been recognized as one of Canada’s Top 100 Employers for eight consecutive years.
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Media contact:
Phil Taylor
Export Development Canada
Tel: (613) 598-2904
Blackberry: ptaylor@edc.ca
