A new flax supply and demand estimate calls for a much smaller crop than Agriculture Canada predicts.
In the July 2010 Flax Market Report issued by the Saskatchewan Flax Development Commission, analyst Larry Weber predicts harvested area will fall to the range of 650,000 to 815,000 acres.
“This will position flax production and carryover to be the second smallest since 1994-95,” he said.
His acreage projection is substantially lower than Agriculture Canada’s. The agency forecast 988,000 harvested acres in its July 8 Grains and Oilseeds Supply and Disposition report.
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Weber is forecasting 417,147 tonnes of production as his midpoint estimate, which is sandwiched between his worst case and best case scenarios of 315,357 and 527,738 tonnes.
That compares to 530,000 tonnes in the Agriculture Canada forecast.
His midpoint estimate for carryout is 139,647 tonnes, which is below Agriculture Canada’s 150,000 tonne forecast.
Weber thinks it adds up to higher prices for flax. He believes $14 per bushel is a given, considering most of the crop is two to three weeks behind normal development and could face frost damage.
Terry James, flax trader with Richardson International, wouldn’t comment on Weber’s outlook but noted that China is starting to balk at today’s prices.
“They are price buyers, strictly price buyers,” said James.
China is the second biggest buyer of Canadian flax this year, filling the void left by slumping sales to Europe in the post-Triffid contamination environment.
The country did most of its buying in the months following the September discovery of Triffid in Canadian flax. Triffid caused prices to fall from $12 per bu. in August 2009 to half that amount the following month. Prices have recently rebounded to as high as $13 per bu. due to the poor growing conditions.
“Values are sharply higher. Right now at these current values, (the Chinese) are probably priced right out,” said James.
Fortunately, a new export protocol signed with Europe in March has partially restored trade with that important customer.
“The new protocol has helped,” said James.
Allen Kuhlmann, chair of the Saskatchewan Flax Development Council, said the flax crop could be tiny this year, especially if growers are not blessed with an abnormally warm fall.
He said it’s a guessing game where prices will go from here.
“If I could get $13 and a little bit for my flax, I’m going to be happy that that’s a good price. But I wouldn’t be surprised if it goes higher,” said the grower from Vanguard, Sask.
