Both Canada and the United States released their export numbers for the month of October this week and there are some interesting takeaways.
Fresh off last week’s third quarter GDP numbers that were dragged down by weak exports, the Statistics Canada trade data pushlished on Tuesday showed rebounding exports.
Canada’s trade deficit shrank to a five-month low in October, with a trade deficit of $1.48 billion, which is the smallest reported number since May.
Exports led the way, growing 2.7 percent in comparison to the previous month. An exciting point for the export number was the fact it was broad, as nine of 11 industry sectors showed an increase. This was not just one sector increasing the average but instead was much wider in result.
The commentary from StatsCan noted stronger canola seed and oil exports were a factor, partly on higher Chinese demand for Canadian canola. There were also increased exports of canola seed to Mexico, the United Arab Emirates, Pakistan and Japan.
As for agriculture, “We can clearly see the usual short-term boost of a weaker loonie behind the strong export performance. Agri-food exports followed the general trend: ag exports rebounded 7% and food exports climbed 17%. But long-term export performance is more function of the health of the world economy and our own competitiveness than the weak loonie,” notes JP Gervais, chief economist with Farm Credit Canada.
“Agriculture is like many other industries in Canada in the sense that exports drive the bus on farmers’ profitability,” says RealAgriculture’s Shaun Haney. “Trade is something the farmer doesn’t think about every day but without it, their farms would look incredibly different.”
The United States also reported its trade numbers, which showed a three year high in exports to Mexico and China while increasing the trade deficit to a nine month high. Several analysts and economists say the strong October export numbers weaken President Trump’s argument that trade deficits matter and need to be reduced.