Markets for Canadian mustard aren’t likely to heat up soon but a mustard seed trader from central Saskatchewan is urging producers not to abandon the crop in 2011.
Bob Waldbauer of Lakeside Global Grains in Dafoe, Sask., urged disgruntled growers to stick with the crop.
He advised them to plant a modest to average-sized crop and be prepared to sit on production if prices show no signs of strengthening.
“Do not abandon mustard,” Waldbauer urged producers attending Saskatchewan Mustard Development Commission meetings held during Crop Production Week Jan. 8-15 in Saskatoon.
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“It’s true that the market is lazy right now. It may be the same tomorrow, but somewhere along the line, it’s going to hit again,” he said.
“You’re not going to hit a home run with this crop every year you seed it but you won’t do that with any commodity. The key is not to strike out.”
Markets for Canadian mustard have steadily declined for two years.
In 2007-08, Canada’s year ending mustard stocks plummeted to 27,000 tonnes and the stocks-to-use ratio was a meagre 14 percent.
Concerns over dwindling supplies drove prices up and by late 2008, cash prices for yellow mustard in Saskatchewan peaked at more than 60 cents per pound. Brown and oriental types briefly hit 45 cents.
Overproduction ended the rally. In the spring of 2009, Canadian growers planted one of their largest mustard crops and harvested nearly 900 lb. per acre.
Since then, prices have been falling. As of last week, cash prices in Saskatchewan for all types were 20 to 22 cents per lb.
Waldbauer said prices will likely remain weak for the rest of 2011 unless a major wreck occurs in Western Canada or Eastern Europe, the world’s biggest production regions.
Canadian supplies are plentiful and foreign buyers have access to a large European crop.
As a result, shipments of quality Canadian mustard are limited.
Canada’s year-ending stocks for the 2010-11 crop year are estimated at 123,000 tonnes, which is expected to drop in 2011-12 because of reduced acreage. However, Waldbauer said processors need time to work through burdensome supplies.
“The market does remain dull right now. It does remain slow,” he said.
“The operative word is challenging … but with challenge comes opportunity. Prices will head higher, eventually.… I’m like you. I don’t know when exactly, or by how much, but it’s going to happen.”
Michael Kemperdick, an official with the European mustard buyer Schluter &Maack GmbH based in Hamburg, Germany, said demand for mustard seed is stable in Western Europe but rising in Eastern Europe.
European production has grown over the past few years, especially in the Czech Republic and Ukraine, but acreage in those countries can fluctuate significantly.
Supplies from Eastern Europe are highly volatile, supplier reliability is worrisome and seed quality is low, Kemperdick said. Yet most mustard processors in the EU will opt for European seed based on price.
“If it’s available, Eastern European yellow mustard is bought by almost all European (processors),” he said.
Canadian mustard, especially yellow, is attracting little interest in Europe because supplies of inexpensive European seed are plentiful.
Other factors deterring European processors from buying Canadian are high freight rates, a strong Canadian dollar, long delivery times and lingering concerns about the adventitious presence of genetically modified canola seeds in Canadian mustard seed shipments.
Yellow mustard delivered to Hamburg is trading at $520 per tonne.
“Provided we get a normal crop … we will get the same prices again in 2011,” Kemperdick said. “If we get a crop problem … we could be anywhere.”
Waldbauer’s outlook was similarly bleak, predicting prices that are unlikely to surpass 28 cents. Brown and oriental types are likely to stay in the 20 to 22 cent range.
