Tight supply has mustard growers hoping for rally

Mustard prices are up but it might be prudent for growers to delay selling until the new year due to tight supplies, say buyers.

“If it’s something they can sit on, they might want to wait until January and see what comes of it,” said Kevin Dick, president of All Commodities Trading Ltd.

“I’m not guaranteeing that things are going to go up in January, but I don’t see a whole lot of downside, that’s for sure.”

Canadian farmers reduced acres by about one-third from the previous year and yields were dismal due to dry conditions.

“That has definitely affected the supply of the 2017 crop,” Dick said.

“It has caused the price to go up a bit but it hasn’t gotten away from us.”

Walter Dyck, seed division manager with Olds Products, agrees that a wait-and-see strategy could pay dividends, especially with yellow and oriental mustard.

Yellow bids are already in the 35 to 37 cents per pound range, up from lows earlier in the year of 28 cents. Dyck said there is no question prices are still too low.

“I wouldn’t be surprised if the yellows moved into the high 30s or low 40s,” he said.

Oriental bids are around 35 cents but could move higher as well due to a small crop.

Brown mustard is fetching 40 cents per lb., up from the contracted price of 32 to 35 cents. That is the type of mustard that is in high demand because there was next to no carryout from last year and very limited acres this year.

“The price can really go to almost any level,” said Dyck.

But France is essentially the only customer and once importers have their fill, the prices will crash as quickly as they shot up, so the wait-and-see approach is a dangerous game with that crop.

Dick estimates growers harvested 110,000 to 115,000 tonnes of mustard, which is in line with Agriculture Canada’s latest estimate.

He figures 70 percent of the acres were yellow, 18 percent oriental and 12 percent brown.

“Brown is the one that’s pretty scary,” he said.

Dyck estimates the average yield in the U.S. and Canada is 650 pounds per acre, down from 950 lb. per acre last year. He agrees with the production estimate of 110,000 to 115,000 tonnes.

That is not enough to meet annual export demand of 125,000 tonnes. But there was a substantial carryover of about 80,000 tonnes of yellow and oriental mustard from the previous year.

Dick said the big wildcard in the demand picture for yellow mustard is western Europe and that depends on how much mustard buyers there can source from the Black Sea region.

If Russia and Ukraine have poor crops, it will result in incremental demand for at least 25,000 tonnes of Canadian yellow mustard. But if they have good crops, there will be next to no demand for Canadian product from western Europe.

European buyers will take as much yellow mustard as they can from the Black Sea because it is usually cheaper than Canadian product.

Dick has received no emails from buyers looking for Canadian product but they typically wait it out as long as they can, careful not to show their cards.

Stat Publishing forecasts 79,000 tonnes of Russian mustard production and 74,000 tonnes from Ukraine, both of which are average crops.

Dyck has heard acres are down in the Black Sea region but farmers got “very decent” yields.

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