Prairie farmers could lose their taste for mustard next spring.
After three years of unbridled expansion, mustard acreage in Western Canada is expected to contract in 2004.
“I think a range of 650,000-700,000 acres is probably realistic,” said Steve Foster, senior merchandiser for mustard with Saskatchewan Wheat Pool.
That would represent a decline of around 16 percent from the 810,000 acres seeded in 2003.
That acreage produced a crop of 226,000 tonnes. Agriculture Canada projects that year-end stocks will be 95,000 tonnes next July 31.
With total export and domestic consumption in 2003-04 estimated at 196,000 tonnes, that represents a burdensome stocks-to-use ratio of 48 percent.
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Analysts and traders say prices this year will likely be in the range of 17-20 cents a pound for brown and yellow mustard and probably around 20 cents a lb. for oriental mustard.
About 52 percent of the 2003 crop was yellow, 32 percent brown and 15 percent oriental.
Historically, those projected prices aren’t bad. But after seeing prices average 27 cents last year and 31 cents the year before that, with spot prices at times hitting 60-70 cents for yellow mustard, some growers may be disappointed.
“I think you could have mustard as low as 15 cents before this year is out, if we get good moisture this winter,” said Foster.
Agriculture Canada market analyst Stan Skrypetz said with ample supplies of good quality mustard, there’s no reason to expect the market to strengthen any time soon.
But at the same time, one can never rule anything out.
“With these types of crops, with smaller volumes and less information and statistics available, there is a lot more room for surprise than with wheat or canola,” he said.
Foster said prices will need to be at least 18-19 cents (high for oriental, lower for brown) if mustard is going to successfully compete for acreage with canola and other cropping alternatives next spring.
A dry winter and spring would also work against mustard acreage, since small-seeded mustard must be planted shallowly.
Farmers should also consider what another big crop in 2004 might do to markets in 2004-05.
“If we get a good crop this coming year, our pipeline is going to be more than full again and mustard values are going to just get back to the traditional levels of the low teens,” he said.
As of last week, Sask Pool was quoting prices of 16 cents a lb. for top grade yellow mustard, 16 cents for brown and 18 cents for oriental, with premiums for milling quality.
Most buyers are covered for the next few months, with the market outlook described by one grain market newsletter as “flat to downward” through the winter due to ample supplies and slow demand.
While stocks are high, Foster said probably 50,000-60,000 lb. of the projected July 31 carryout is lower quality seed from the past two years and shouldn’t have a direct impact on prices for top grade.
Another factor in the market in the coming year could be the situation south of the border. U.S. production, which is nearly all yellow, is down sharply after a 49 percent decline in seeded acreage in 2003. The decline reflected a return to more normal acreage, following a huge price-related jump in 2002, along with the impact of drought.
That could create some export opportunities for Canada, which in recent years has shipped 40,000-50,000 tonnes annually to the U.S.
