Posted on Thursday, November 8th, 2012 | In Market Commentary
Canada has the 7th largest economy in the world and is the 2nd largest country by land mass. It has a wealth of natural resources, making it a large energy and minerals exporter. For commodity traders looking to invest primarily in North America, Canada presents a compelling opportunity. [This article takes a look at Canada's top commodity exports and imports and offers suggestions as how to invest in Canada's commodity industry.] Words: 905
So says Tim Parker (www.CommodityHQ.com) in edited excerpts from his original article* entitled A Deeper Look At Canada’s Commodity Industry. For other commodity news and analysis subscribe to their free newsletter and munKNEE.com’s very own free Your Daily Intelligence Report which consists of edited excerpts from the “best of the best” financial/economic/investment articles of the day to provide clarity and brevity and ensure you a fast and easy read.
Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Canada’s Top Commodity Exports
“Energy products are the largest of Canada’s exports and, although Canada increased energy product exports to China by almost half from 2008 to 2010, the United States remains Canada’s principal energy destination, importing nearly 12 times more than China.
- Crude Oil: Canada is the 6th largest crude oil producer on the planet and it is Canada’s largest commodity export. The United States is the top importer of Canadian oil followed by Russia and the United Kingdom.
- Natural Gas: Canada is the 6th largest natural gas producer in the world with 700 active production facilities.
- Coal: Canada has 23 mines producing 68 million tons each year of which almost 50% was exported in 2010, up 25% from 2009. Asia is Canada’s largest coal trading partner accounting for nearly 3/4th of total exports.
- Gold: Although none of the world’s 10 largest gold mines are located in Canada, gold is Canada’s 2nd largest export and home to almost 3/4th of the world’s mining companies, making it the 4th largest gold mining country in the world. Most Canadian gold comes from underground and open-pit mines in Quebec and Ontario.
- Maple Syrup: Canada provides more than 3/4th of the global supply. Primarily centered in Quebec, this $6.3 billion industry is comprised of more than 32,000 agricultural businesses. The overall size of the market does not make this a large-scale export but the near-monopoly Canada holds is notable.
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Canada’s Top Commodity Imports
Canada is the 12th largest commodity importer in the world of which more than half comes from the U.S.
- Crude Oil: Canadians import approximately 295 million barrels per year for a net expense of $12.2 billion. Imports take place primarily in the winter months when heating energy needs increase and, to a slightly lesser extent, during summer months during peak driving months.
- Natural Gas: Canada imports nearly 700 billion cubic feet of natural gas at a cost of $3.6 billion. As natural gas prices have fallen, Canada has imported more natural gas but spent less on it. The majority of Canada’s natural gas imports come from the United States.
- Electricity: Canada and the United States share an integrated electrical grid serving as importers and exporters to each other in order to meet nearly all of each other’s electrical energy needs. This not only provides for the energy needs of each country but also serves as a key element of national security.
- Food Products: The country imports more than $35 billion in agri-food imports each year. Canola and non-durum wheat top the list for a combined $8 billion. Soybeans, pork, bread, coffee, and frozen snow crabs are among the many other food items imported from the United States and other countries.
Ways to Play the Market
Below, we outline several ways to make a play on Canada’s massive commodity industry.
- Guggenheim Canadian Energy Income (ENY): ENY is an ETF that seeks to replicate the performance of the Sustainable Canadian Energy Income Index-an index of 200 securities listed on the Toronto Stock Exchange representing the Canadian oil and gas industry.
- IQ Canada Small Cap ETF (CNDA): This small cap fund puts more than 75% of its assets in Canadian firms that fall under the energy and basic materials sectors.
- MSCI Canada Index Fund (EWC): This ETF focuses on broad Canada exposure, but over 45% of its assets are dedicated to the energy and basic materials sectors.
- Gold Explorers ETF (GLDX): A fund that invests in gold exploration companies, nearly 95% of GLDX’s assets are dedicated to Canadian firms.
- Market Vectors TR Gold Miners (GDX): The mega-popular gold mining fund has over 65% of its assets in Canadian companies.
- Pengrowth Energy Corporation (PGH): PGH explores and develops oil and natural gas reserves in Canada. As of the beginning of 2012, PGH had about 4,000 producing and 1,400 non-producing oil and natural gas wells in Alberta, British Columbia, Saskatchewan and Nova Scotia.
- NovaGold Resources Inc. (NG): NG is a miner of gold, silver, copper, zinc and lead ores primarily in Alaska and British Columbia. NovaGold is headquartered in Vancouver.
- TransCanada Corp. (TRP): TRP operates natural gas and oil pipelines in the United States and Canada. It currently owns 57,000 kilometers of natural gas pipelines and nearly 3,500 kilometers of crude oil infrastructure. In addition, TransCanada has interests in power plants with a combined total capacity of nearly 11,000 megawatts.
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In 2011, the value of Canada’s total minerals production increased by just under 25%, reaching a record $50.3 billion. Coal production rose more than 25% while the metals market increased slightly less than 20% due to higher prices for most major metals. This upward trend has been intact for seven of the past eight years. Projections indicate an expenditure of a record $4 billion on exploration and deposit appraisal in 2012.
Canada is the second largest country in the world by land mass. It contains a wealth of untapped natural resources. In northern Canada alone, $100 billion is being poured into diamond mines, uranium exploration, new gas wells and pipeline projects. All of this points to some exceptional commodity trading opportunities in this often overlooked country.
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
Commodity investing has been around for decades, but it was only recently that their popularity has spread to the general public. It is now generally recommended that investors set aside anywhere from 5% to 10% of their capital for a commodity allocation, as these hard assets generally offer uncorrelated returns essential to diversification. While many investors utilize stocks, ETFs, and futures to obtain their commodity exposure, options contracts can often be a better alternative to not only your commodity holdings, but for the remainder of your portfolio as well [Let me tell you more about options and also why they might/should have a place in your portfolio]. Words: 995
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Silver has been an important metal for thousands of years, often used as a medium of exchange or jewelry in ancient times….Today, silver still finds its way into jewelry and coins but it is now also a key ingredient in many ‘modern’ applications as well….Due to this multitude of uses the metal has continued to be a popular investable asset…[as well] as a store of value and an inflation hedge. Below are a list of the top 10 silver producing countries, the top 10 silver producing companies and a definitive guide as to the multiple options of investing in the metal. Words: 2091
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Lorimer Wilson is Editor of FinancialArticleSummariesToday.com (F.A.S.T.) and www.MunKnee.com (Money, Monnee, Munknee!) and an economic analyst and financial writer. He is also a frequent contributor to this site and can be reached at email@example.com