MORRIS, Man. – Flax growers may be a little glum right now, but there
could be some happier faces in a few weeks.
European demand should soon pull prices a little higher, said Don Kerr
of James Richardson International.
He told the Manitoba Flax Growers Association not to expect too much,
because so long as large soybean supplies are weighing down the
vegetable oil market, flax can move only so far.
“I don’t think you’ll see $10 a bushel, but I think you might see $8 a
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bu. again,” said Kerr.
“I think we’re going to see an opportunity within the next month or so.
I think the flax prices are quite depressed at the moment because the
Europeans aren’t buying it, but the Europeans have a demand for flax
that remains unfulfilled.
“They’re going to have to come into the market and they’re going to
have to buy for April and May.”
Kerr said European buying disappears between December and April because
the St. Lawrence Seaway is closed.
Sales to Europe have surged in recent years. They jumped from 320,000
tonnes in 1999-2000 to 471,000 in 2000-2001. That will likely slip this
year to 450,000 tonnes, Kerr said.
European demand is high because production there has fallen
dramatically, Kerr said. European Union subsidies for flax were cut,
causing production to fall by about 400,000 tonnes.
Increased American production, caused by an increase in production
subsidies, has taken up some of that increased European demand, but the
extra demand for Canadian flax has been substantial.
Kerr thinks this year’s Canadian carryout will be the lowest in four
years. There should only be about 134,000 tonnes in commercial storage
and 355,000 tonnes on farm when the new crop comes in.
“It’s fairly tight. There’s not a lot of flax out there,” said Kerr.
Producers may be frustrated that prices haven’t risen further, but
heavy stocks of soybeans will limit flax price increases.
