If you didn’t contract your mustard crop during the spring or summer, you probably don’t have to worry about prices or buyers.
That’s because there aren’t likely to be any, says one mustard marketer.
“People who produced under contract are getting shipping orders, but those growers that grew spot mustard are not seeing demand for it,” said Walter Dyck of Demeter Agro in Lethbridge, a major mustard marketer owned by Agricore United.
“This is definitely a year when it paid to have a production contract.”
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Mustard is a crop with wild swings in production and price. It grows best in southwestern Saskatchewan and southeastern Alberta, where droughts are frequent and often severe.
Exacerbating the weather’s effects is the tendency of farmers to plant crops that are getting good prices over the winter, so after a year of short supply the mustard market is often glutted with a huge crop. After the market price crashes, farmers back away from the crop, paving the way for another price spike in following years.
In years with drought, those farmers lucky enough to get a crop can usually grab a great price after harvest, unless they have contracted their price earlier in the year.
But when production exceeds demand, farmers relying on the cash market often end up binning their crop for a year or more.
That’s the situation this year. After a few years of drought-reduced crops, farmers on the western Prairies produced a big mustard crop this year.
Fortunately offshore demand is high, so much of the crop will be consumed, but not enough to make room for unpriced mustard.
“That export demand was all satisfied with contracts that the world’s customers set up back in January, February, March,” Dyck said.
“Those will meet their requirements for 2005.”
He said farmers with uncontracted mustard will probably have to store it for “at least” a year. Fortunately, mustard stores well, and many farmers plant it knowing that if the market is flooded in the year the crop was grown, they can store it and wait for better prices in the future.
Canada is the world’s dominant mustard exporter, often taking 75 percent of world trade.
Dyck said this year’s crop exceeded world demand by a significant margin.
He said the average price his company contracted to farmers for the 2004 crop was 20 cents per pound for yellow mustard, 18.5 cents per lb. for brown mustard, and 18 cents per lb. for oriental mustard.
That’s less than last year’s prices, which followed the drought years, but still better than the 15-year average.
