Statistics Canada has overstated the country’s 2012-13 flax production and carryout, says an analyst, and any North American weather disturbance could see prices rise before spring.
Larry Weber of Weber Commodities Ltd. told producers attending the flax portion of Crop Production Week that there is no way growers planted the 980,000 acres Statistics Canada reported.
“I’m using 750,000. That might be a bit on the low side but I guarantee you it’s not 980,000, and nobody drives this province more than I do in the summertime,” he said.
As a result, Weber isn’t buying the federal agency’s 489,000 tonne production and 125,000 tonne carryout estimates.
He believes carryout could be as low as 75,000 tonnes, which is extremely tight. That’s why he thinks new crop prices of $13.75 per bushel could be on the rise.
“If we have any weather scare in North America, flax is at $15 before seeding,” he said.
Two of the four weather forecasters that Weber follows are calling for a continuation of the 2012 drought in the U.S. Midwest and Southern Plains.
“If we have an all-out drought like we did last year in the United States, $20 is possible again,” he said.
China is experiencing its coldest winter in 28 years. Weber has read reports that the conditions are as severe as they were in 2008, when 30 to 40 percent of China’s rapeseed crop was covered in ice.
“If that happens, it’s great news for flax.”
China is Canada’s largest flax customer, and any domestic rapeseed shortage could spur flax demand.
It is also dry in Russia’s Volga region. The country has become an important producer and exporter of flax, which means it is also positive news for Canadian growers.
The bad news is that it is also dry in some of Saskatchewan’s prime flax growing regions, such as crop district 6 A southeast of Saskatoon, which was home to 22 percent of the 2011-12 flax crop.
Weber is forecasting 1.1 million acres of Canadian flax in 2013 with the gains coming at the expense of canola, which was seeded on 21.5 million acres last year.
“I’m using 19 million acres of canola and I’m probably high.”
Weber thinks the flax industry is wasting its time by going to great lengths to rid the system of Triffid, a genetically modified variety that disrupted sales to Europe.
“I don’t think the Europeans are coming back,” he told producers.
The Saskatchewan Flax Development Commission is asking growers to market all of their stored seed produced prior to 2013 before early 2014.
Weber said that policy forces growers to tip their hands to buyers.
He believes the industry should give up on Europe’s industrial oilseed market and focus on the more lucrative food markets in North America, which should be clamouring for the crop’s health benefits.
“I still believe that flax is the next crop. There is more potential in flax today than any other grain, oilseed or pulse,” said Weber.
If Europe remains a target market, he added, somebody should be taking a closer look at the Russian flax that has displaced Canadian flax..
“Who has tested their flax for Triffid? I would bet that they got their flax seed from us,” said Weber.
“I guarantee you there is going to be Triffid in some of that.”