Canada invited to participate in Trans-Pacific Partnership talks

Jun 20, 2012

What will this mean for agriculture?

After intense lobbying, Canada has been invited to join the Trans-Pacific Partnership trade talks. This signals a major breakthrough for the Harper government, and if successful the new trade deal could generate up to $20.5 trillion dollars annually. But critics warn that entering into this trade deal could force Canada to make significant sacrifices to its agriculture policies. Canada’s dairy, poultry, and egg sectors which are currently protected under the supply management system limit foreign competition. While supply managed sectors are cautious to welcome this announcement, other commodity groups including the Canadian Cattlemen's Association, Canadian Pork Council, Grain Growers of Canada and Canadian Canola Growers Association are pleased to hear that the talks are underway. These non-supply management commodities rely heavily on the export market. Although, there is much speculation on the negative impact this new trade deal could have, the government remains confident that this partnership will not result in trade-offs on large ticket items. "We're not going to join into anything with pre-conditions that we have to agree to. That's not the nature of the negotiations," says Agriculture Minister Gerry Ritz. Given the Harper governments pro-trade agenda, they have surprisingly been a strong advocate for the supply managed sectors maintaining that they will continue to uphold the status quo. As the talks begin to unfold, it should become clearer what the impact will be for the agriculture sector, and if the government can continue to dodge the bullet on upholding the supply managed sectors of the economy.

Video: Will the 2025 USDA December Crop Report Be a Market Mover/Surprise?

Historically, the USDA December crop report is a non-event or another dud report as the USDA reserves any final supply changes to the final report in January of the following year in this case 2026. But after the longest U.S. government shutdown in history at 43 days and no October crop report will they provide more data/surprise and make an exception?
Our China U.S. soybean purchase tracker is now at 26.6% or a total of 3.2 mmt but for traders it’s taking too long to unfold.
The final Stats Canada production report was bearish canola and wheat projection a record crop in both (it adds to the global glut of supplies) and bullish local corn and soybean prices in Ontario/Quebec thanks to a drought. It will not help the fund flow short-term, the USDA may need to offset it?
A U.S. Fed interest rate cut of another 25-basis point next Wednesday (probability 87.1%) could help fund flow and sentiment in stock and ag commodities into year end.
More inflows into Bitcoin this past week saw prices rebound back above 90,000 with support at 82,000 and resistance at 96,000.
A V-shaped bottom in cattle suggest the lows are in after Mexico reported another new world screwworm case. Lower weights, seasonal demand and higher U.S. beef select/choice values with a continued closure of the Mexican border to cattle will result in a resumption of higher cattle futures into yearend.
Australia is expected to produce its 3rd largest wheat crop ever at 36 mmt adding to the global glut of supplies.
Reports of ASF in hogs in Spain the largest pork exporter in Europe could see the U.S. win more pork export business long-term.
If the rains verify into next week of 3-5 inches for Brazil it would go a long way to fixing the dry regions from the last 2-months, but the European weather model has been wrong for the past 2-months!
Natural gas futures are surging to the 3rd price count as frigid hold temps set in.
CDN $ is also surging to end the week on a very resilient economy and better employment numbers suggesting no interest rate cuts next week.
Finally, the CFTC report showed funds were net buyers of soybeans but sellers of corn, canola and wheat. In real time the funds have gone back to selling as they take some profits.