It’s a market outlook that can’t be wrong.
Mustard prices could go up in 2009.
Then again, mustard prices could go down.
That was the message delivered by mustard market expert Steve Gadient to producers attending the annual meeting of the Saskatchewan Mustard Development Commission last week.
Gadient, who works with Montana Specialty Mills Ltd., was unable to offer growers any surety about the prices they’ll get for their 2009 crop.
“There really is no clear direction in the market right now,” he said, describing the outlook as unpredictable and volatile.
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“Mustard will be relatively attractive compared to other crops, but I can’t say with any certainty what the price will be.”
Contracts for yellow mustard were around 40 cents a pound last November. Recent offers have been 35 to 37 cents, with some slipping to around 32 cents.
Prices for brown and oriental mustard have been falling in a similar way.
Gadient said processors bought supplies at high prices last fall and are reluctant to make more purchases now, given uncertainty about future demand from end users.
“Processors and importers have shown little interest in purchasing additional mustard,” he said. “When they make a buying decision, it will be hand-to-mouth.”
He added that while mustard prices may be below last year, they still pencil out well compared to other crops.
“Mustard is one of the few crops where producers can still lock in pretty reasonable profit,” he said, adding farmers should take advantage of that now, given how volatile the market is.
Gadient provided the following forecast of contract prices in the coming year:
- Yellow mustard: There’s a 35 percent chance prices will be below 35 cents, a 30 percent chance prices will be 35 to 39 cents, and a 35 percent chance they will be 40 cents or more.
- Brown mustard: There’s a 35 percent chance prices will be below 28 cents, a 30 percent chance of prices in the range of 28 to 32 cents, and a 30 percent chance of prices above 32 cents.
- Oriental mustard: There’s a 40 percent chance prices will be below 28 cents, a 30 percent of 28 to 32 cents and a 30 percent chance of prices above 32 cents.
Baine Fritzler, a mustard grower from Govan, Sask., and chair of the Saskatchewan Mustard Development Commission, said while the price outlook isn’t bad, most producers are probably disappointed.
“When you come from historical highs down to mediocre prices, even though they’re still at a profitable level, it’s pretty hard to swallow,” he said.
He agreed with Gadient that mustard looks good compared with most other crops. Producers who signed contracts in November and December at 40 cents are in a good position.
“The early bird got the worm this time,” he said, adding a lot of companies have withdrawn from the market and are waiting to see what end users will do.
Gadient told the growers meeting that mustard buyers are hoping for a sizable increase in acreage in 2009.
Processors are “really scared” by the combination of low inventory and economic uncertainty, he said, and an increase in acreage would provide security going into 2009-10.
“The industry would like to see at least 50 percent more mustard go into the ground in 2009.”
