Declining Lumber Prices Cause Canada’s Trade Surplus to Shrink in July

Statistics Canada (StatsCan) is reporting that in July, Canada’s merchandise imports rose 4.2% and exports increased 0.6%. As a result, Canada’s merchandise trade surplus narrowed from $2.6 billion in June to $778 million (CAD) in July. In real (or volume) terms, total imports rose 1.9% in July, while exports edged down 0.3%. Higher prices therefore had a significant impact on import and export values in July.

Exports prices increased sharply since the end of last year, up 16.7% in July compared with December 2020. After a sharp increase of 7.5% in June, total exports rose 0.6% in July to $53.7 billion, another record high. The increases observed in other product sections were almost entirely offset by the decrease in exports of forestry products and building and packaging materials (-12.7%). The decrease in exports of lumber and other sawmill products (-23.6%) drove the decline, the result of a fall in prices. Lower demand contributed in part to a decrease in lumber prices in July.