You might expect farmers to be saying “Hold the mustard!” this spring, but depressed prices do not appear to be stopping them from seeding the crop.
With poor price prospects in most places they look, farmers plan to seed a lot of crops they doubt they’ll make money on.
“A guy has to put something in,” said Shaunavon, Sask., farmer Brett Meinert, who recently seeded almost 1,000 acres to mustard in a year when 14 cents per pound has been typical.
“I don’t know if it’s any better or any worse than any of the other crops.”
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Mustard prices tend to gyrate wildly year to year because the Canadian Prairies produce about 75 percent of world trade. If a big acreage is seeded in Canada and good weather helps it along, a huge crop can appear at harvest, devastating prices.
But small acreage and bad weather can cause prices to skyrocket.
A good crop last year and large carry-in stocks meant last winter’s marketing season was one long bleed for many producers.
Still, with few better alternatives, farmers told Statistics Canada they plan to plant about 410,000 acres, a drop of 22 percent, but still enough to produce an adequate crop with the right weather.
“One of the tricks is that if you can get a good start, (mustard) can take some of the drier conditions through the growing season,” said mustard marketer Steve Foster of Saskatchewan Wheat Pool.
“If they get it in the ground, we should have no trouble getting a reasonably good crop. If we get that, don’t expect the prices to go anywhere in the short term.”
There is still enough mustard in farmers’ bins to make up for a crop shortfall this summer, and that’s what’s keeping prices down, Foster said.
“The cycle’s doing what it should be doing. Prices are low, acres have to go down, the supplies have to go down for the price to recover,” said Foster.
But if weather problems hurt the 2006 crop and it looks like stocks will be drawn down, mustard buyers may become more aggressive, Foster said. Buyers, who have gotten used to cheap prices, might move to protect themselves from a weather induced price surge.
“You’d still see the market get very volatile very quickly,” said Foster.
With average weather conditions, mustard stocks will remain ample and prices will continue to suffer in the 2006-07 crop year, encouraging farmers to limit mustard acreage.
“It’s going through the cycle like it should be,” said Foster.
Farm marketing adviser John Duvenaud thinks mustard prices can’t get much worse, and assumptions about ample supplies may be misplaced.
“That’s a crop I wouldn’t price anything for right now,” said Duvenaud, who publishes the Wild Oats marketing newsletter.
“There might be a surprise in the market this year.”
Weather is always a risk for the crop, which is grown in a concentrated area of western Saskatchewan and Alberta. Stocks might be smaller than thought because many may have degraded in the bin.
Foster thinks farmer-stored mustard has quality problems, but is not bad enough to significantly undercut supply projections. But Duvenaud thinks there may be surprises lurking in bins.
For Meinert, a thousand acres of mustard does not offer a big hope for profit. But for a drought-prone area like his, it may be one of his better choices.
“I don’t know if there is a good choice,” said Meinert. “It’s a bit of a challenge.”
