Farmers with mustard in their bins could make a lot of money this
winter.
And, say analysts, the record high prices aren’t going to go away any
time soon.
But many doubt whether there are more than a handful of farmers who
will be able to take advantage of the situation.
“I would not expect there to be a lot of bushels out there,” said Swift
Current, Sask., farmer Brett Meinert, who is president of the
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Saskatchewan Mustard Growers Association.
“With the economic woes the West has had, I would expect a few
(producers have hung onto mustard), but not many. No one who had to
sell just to pay the bills.”
With no substantial stocks left on the Prairies, mustard growers will
be closely watching the prices buyers offer when they reveal their
2002-03 contracts, which usually starts during the Crop Production Show
in mid-January in Saskatoon.
Prices have reached 60 cents per pound for yellow mustard, or about $30
per bushel, in some country bids. That’s far above what anyone
expected. Yellow mustard makes up about half of the prairie mustard
crop. Brown and oriental mustards, which are priced independently,
divide the rest of the acreage.
Yellow mustard cash prices leaped at harvest when farmers across the
Prairies discovered they were bringing in little crop.
Meinert found he had a crop of only seven bushels per acre, well below
the 20 to 30 he usually harvests.
That wasn’t enough to fill the forward sales contract he had signed
with a buyer. All of his crop had to go to the buyer at 17 cents per
pound. He had no mustard free to take advantage of the good prices.
Meinert said that’s common.
“A very large percentage of what was grown was contracted.”
Because there is no futures market for mustard seed, which on average
is grown on only 600,000 acres in Western Canada, processors who use
mustard rely heavily on contracting to assure themselves of supply.
With moisture levels still low in most of the mustard zone, the
prospects for a large 2002 crop are low, Meinert said. That should keep
prices high.
Brian Clancy, an analyst with Stat Market Research, said that will
cause growers to increase acreage this coming spring and be less likely
to forward sell their crop.
“I think there’s no question that the acreage will go up.”
Bill Greuel of Saskatchewan Agriculture said early trade estimates are
pegging the 2002-03 mustard crop at slightly more than 700,000 acres.
While only slightly above average, it is far more than the 312,000
acres that were grown last summer.
But Clancy said massively expanded acreage can’t be counted on yet.
Continuing drought during seeding would still hold many growers back
because they don’t like to sow small-seeded crops into dry soil.
Clancy said this year’s short supply situation isn’t just due to a
small crop in Canada. Though Canada dominates world mustard production,
central Europe also produces significant amounts.
This year the central European crop was poor, driving many buyers to
look for mustard in Canada.
Clancy said this year’s price leap was impressive, but the impact could
flow further down the supply chain if the drought continues next year.
“We’ll get through this year all right,” Clancy said.
“But if we had a second crop disaster in a row, then you could see the
price of mustard seed at retail go up. That would be a sure sign of a
shortfall.”
Meinert thinks some producers may still be hanging onto small
quantities of mustard while they wait for higher prices.
Because most mustard growers only produce only small acreages, they’re
willing to hang onto the crop and gamble on sudden price rallies.
