While the longer-term outlook for exports to China, based on demographics, appears increasingly bearish, the short-term situation still has Canadian producers in a “sweet spot,” according to a veteran western Canadian grain market analyst.
China’s National Bureau of Statistics reported the country’s first official population decline in decades on Tuesday. While China’s population still sits slightly above 1.4 billion, the number was 850 thousand lower at the end of 2022 than the year prior. Analysts who are skeptical of the Chinese government’s data say the decline likely started several years earlier, and point to China’s rapidly declining fertility rate as a major problem for the country’s economy.
The bureau also released data on Tuesday showing China’s economy grew by only three per cent in 2022, down from over eight per cent in 2021, and the second-lowest economic growth rate in at least 40 years.
At the same time, grain exports to China in the current crop year have once again been strong, notes John Duvenaud, of the Wild Oats Grain Market Advisory, in the interview below, recorded at Manitoba Ag Days.
“China has been a real good customer for Canadian crops for several years now,” he says. “We’re really at the sweet spot in our relationship with China.”
Even with the Chinese economy faltering, Duvenaud says he doesn’t expect a correlated decline in crop demand. “They have a command economy, and they are nervous about the revolts there this winter. They’re making darn sure their people get fed. They don’t want any shortages and and Western Canada has benefited from that right now.”
Related: Will grain markets get a soft landing on the backside of the commodity supercycle?
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