Acreage key to flax outlook

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Published: April 26, 2007

Farmers who decide to stick with flax this year could be rewarded for their loyalty, say market analysts.

Before this week’s release of Statistics Canada’s report on seeding intentions, analysts were predicting as much as a 40 percent decline in flax area. (The report was to be released after the deadline for this story.)

Forecasters based those projections on the belief that high canola prices would lead many farmers to switch their flax acres into canola. However, a cooling of the canola market in recent months is now expected to prompt some farmers to rethink that strategy.

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Producers who opt to stick with flax could be in a good position, said flax market watcher Brian Johnson of S.S. Johnson Seeds of Arborg, Man. He said seeded area is key to future price trends.

“If we cut back on acreage, then the long-term outlook for flax prices is pretty good,” he said. “I would say that going forward, six months from now, I’m very optimistic.”

In the short term, a sizable flax inventory has to work its way through the system, which will limit price improvement for the remainder of this crop year.

“I think the market is going to be relatively steady for old crop. In fact, we could even see a dip in old-crop prices once Thunder Bay has been satisfied,” said Johnson.

“It won’t be until the new crop comes in this fall that we’ll see the higher prices.”

Chris Hale, who grows flax on his farm at Rouleau, Sask., is cautiously optimistic.

“We’ll see, but I think it’s reasonable to expect that with the 2007 crop some of it might sell in the $8 a bushel range,” he said, adding that will depend largely on acreage and production.

Hale said flax prices have increased steadily since January in concert with oilseed prices generally. Elevator prices in his area are $7.25 to $7.50 a bu., with top quality product fetching $7.50 to $8.

Johnson said his optimism is based largely on growing demand supported by the development of new uses and markets for flax.

Other positive factors in the flax market outlook are an expected big decline in acreage in the United States, which could mean an increase of some 30 percent in Canadian exports south of the border, and a drop in global production to 2.3 million tonnes from 2.6 million.

Possible negative factors include the strong Canadian dollar, increased flax plantings in Europe and the ability of Eastern European producers to export to European markets traditionally served by Canada.

Agriculture Canada’s March outlook projected 2007-08 flax prices of about $320 a tonne ($8.10 a bu.), up about 10 percent from 2006-07.

That was based on a projected 38 percent drop in seeded area, something analyst Chris Beckman no longer expects.

“The price gap between canola and flax has narrowed considerably, so there could be higher flax acres than in that forecast,” he said.

About the author

Adrian Ewins

Saskatoon newsroom

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