The mustard market is quiet and prices are unlikely to improve in the coming crop year.
Bobby Leavins of Rayglen Commodities told Saskatchewan mustard growers at Crop Production Week in Saskatoon that buyers are holding back and it is hard to do new business.
“Bids and offers are just too far apart to get much business done,” Leavins said.
Buyers are looking at falling prices of major crops and think there is no reason to chase mustard higher.
He said mustard provides a good return on investment even at current prices and growers should be selling. There are a lot of risks in the economy with slow growth and government debt problems, and buyers are nervous.
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“If you look at the charts, we are at historically high prices, maybe not the highest but in the high range for prices,” he said.
“Right now, history is telling us there is a better chance for prices to go lower than higher.”
For new crop, Leavins suggested yellow mustard at 35 cents per pound would generate adequate acreage to meet needs. The range of expected prices is 35 to 37 cents with an outside chance for a rally to 40 cents.
Brown will likely be about 30 cents per lb. with a range of 29 to 32 cents.
Stocks of brown mustard are a little tighter than for other mustard types.
Oriental stocks on the farm are the most burdensome, which is holding back the price to the point where it will not generate needed acreage.
“At 28 cents, I think this crop goes in the ground, but any less it is going to have a tough time because the guys who seed it do have quite a bit in the bin.”
Longer term, Leavins believes mustard marketing must change to keep growers interested.
“Rayglen thinks the biggest problem facing the mustard industry is keeping mustard growers growing mustard,” he said. “Keep that core group in the industry.”
He said it is often a profitable crop, but others can be more profitable and more crop protection products are available for other crops.
“The industry needs to concentrate on being in the top half of the (crop choice) spectrum, just because of the other issues growers deal with, whether it’s weed control or cash flow issues.”
Leavins thinks buyers and growers need to get into long-term contracts.
Rayglen was able to work out a three year flax contract this year with a buyer who wanted stable supply and was willing to pay a premium to get it.
Leavins sees growers shifting to canola if mustard does not take a similar step, which will prevent them from coming back to mustard because canola volunteers will contaminate the mustard samples, limiting their marketability.
