Mustard traders are bewildered by reports that bids fell as low as 14 cents per pound last week.
“All I can tell you is right now it’s business as usual,” said a trader who requested anonymity.
He can’t figure out where the reports of 14-cent bids for yellow mustard are coming from. He is offering 30 cents and isn’t exactly swamped by growers wanting to deliver at that price.
There was speculation in the Sept. 28 issue of a daily newsletter published by Weber Commodities Ltd. that prices had fallen to 14 cents after a bulk vessel of Canadian mustard bound for the European Union tested positive for GM residue.
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Larry Weber said he published the report after hearing it from two different sources.
It helped explain why Stat Publishing was reporting a yellow mustard price of 14.75 cents per lb. for the week ending Sept. 25, down from 35.75 cents the previous week.
But as of Sept. 28, no mustard industry or government official contacted by The Western Producer knew anything about the contamination incident and traders said product was still moving to Europe and elsewhere.
“I sold mustard last week. I sold mustard this morning,” said the trader.
He said European mustard customers are “uncomfortable” in the wake of the GM flax incident that surfaced earlier this month but he knows of no trade disruption.
Prices have fallen since their highs in the spring of 2008 but that is due to normal market factors.
“A lot of the end use customers are still getting over last year’s high values. A lot of those contracts are still being executed on,” he said.
Until buyers return, values will continue to fall in light of what is expected to be a big crop and limited space to store it in the grain handling system. Agriculture Canada is projecting 209,000 tonnes of mustard production, up 30 percent from last year.
The trader said brown mustard values have been particularly hard hit due to high carryover and “extremely good yields” expected for 2009.
“We’ve got an abundance of brown around and not a lot of places on the short-term to take it,” he said.
Kevin Dick, president of All Commodities Trading Ltd., said Europe typically consumes a lot of Canada’s brown mustard.
“There had to be a year where Eastern Europe produced mustard and finally it was this year,” he said.
And that could be a painful development for growers who didn’t lock in prices. Farmers in Saskatchewan and Alberta planted an estimated 545,000 acres of mustard this year, up from 479,000 acres seeded in 2008. A lot was grown under contract but some of it wasn’t.
“I guess people believed that the potential for mustard and huge prices was going to last forever despite us saying many times that was not the case. A lot of people still didn’t listen,” said Dick.
According to Saskatchewan Agriculture’s 2008 Specialty Crop Report, Europe accounted for 43 percent of Canada’s 2007-08 mustard exports. But Dick said there are years where the Europeans don’t buy one pound of the crop.
This is a year where they will likely enter the market late.
