Mustard growers are undoubtedly happy with recent price increases and forecasts of continued strong markets throughout 2007-08, but users aren’t joining in the celebrations.
Mustard buyers in Western Canada have bid up prices in the past year to encourage producers to seed more acres of the spicy oilseed.
Contract prices for the 2007 crop are 50 to 100 percent higher than a year ago.
Growers have responded, with Statistics Canada forecasting a 18.3 percent increase in seeded acres this year.
Steve Foster, a mustard trader with Saskatchewan Wheat Pool, said processors and retailers aren’t thrilled about the price jump.
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“As a supplier we try to convince farmers to grow it and we’re relatively pleased with the response,” he said.
“But a lot of end use customers aren’t very happy with the values we’ve presented to them and aren’t ready to step up and book sales right now.”
Steve Gadient, a Manitoba-based mustard buyer for Montana Specialty Mills, sees the same thing.
“Some large buyers certainly are digging their feet in on the pricing,” he said. “These increases have taken them by surprise and they don’t like it.”
Contract prices for 2007 are 22 to 24 cents a pound for yellow, 19 to 20 cents for brown and 18 to 19 cents for oriental. A year ago, yellow contracts were 14 cents per lb. and spot prices 10 to 12 cents.
Agriculture Canada market analyst Stan Skrypetz has forecasted an overall increase in mustard prices of 18 percent in 2007-08, based on a blended price including all types and qualities of mustard.
However, he said the higher price is unlikely to significantly reduce sales. He projects exports of 130,000 tonnes, down from 135,000, with the decline coming in sales of oriental into the lower-value oil market.
Because Canada is a dominant player in the mustard export market, buyers have no choice but to pay the going price, unless sizable supplies turn up from an unexpected source.
He noted that prices were as high as 50 cents a lb. for yellow and 30 cents for brown in 2002-03, a year of sharply reduced supplies.
Tight stocks should also help support prices in 2007-08. Agriculture Canada has put ending stocks on July 31, 2008, at 45,000 tonnes, down from 100,000 tonnes in 2006 and 190,000 in 2005.
Foster said European buyers should increase demand in the coming year, given dry conditions in some mustard growing regions there.
He added that while it would have been nice if 2007 plantings reached 500,000 acres, the 420,000 acres forecast should produce enough to meet demand, assuming normal growing and harvest conditions.
Tom Burwell, who grows mustard every year on his farm at Asquith, Sask., said while growers would like to see prices of 26 or 27 cents, current contract levels aren’t bad and should allow producers to turn a profit.
Burwell, chair of the Saskatchewan Mustard Development Commission, said the early outlook for the 2007 crop is positive.
“So far the conditions are quite favourable, with good potential for the coming year,” he said.
Gadient expects farmers may not contract as much of their production as usual, perhaps down to 60 percent from traditional levels of 70 to 75 percent.
