Chuck Penner had a one-word reaction to Saskatchewan Agriculture’s forecast of a seven to eight percent decline in flax acres this.
“Yikes!” said the Informa Economics crop analyst.
“The market really needs quite a bit less flax than that.”
Saskatchewan farmers grew 79 percent of Canada’s 2009 flax crop, so they will have a big say in this year’s production.
Penner thinks a seven to eight percent decline is not adequate in the wake of the CDC Triffid incident.
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Other analysts have forecast a far more drastic decline.
Larry Weber of Weber Commodities Ltd. sees a 45 percent drop in Saskatchewan flax acres.
Agriculture Canada estimates a 1.22 million acre crop, down 28 percent from the 1.71 million acres that were seeded in 2009.
Penner’s forecast isn’t as aggressive as Agriculture Canada’s, but he believes there will be fewer acres than what Saskatchewan Agriculture’s crop reporters predict.
Exports have been surprisingly strong given the restrictions in shipping to Europe in the post-Triffid environment. Shipments are slightly ahead of last year’s pace through week 36 of the 2009-10 crop year.
There is typically a lull in flax sales during winter while the St. Lawrence Seaway is closed, but flax moved out of east and west coast ports to China and Europe this winter.
Despite better-than-expected sales, Penner still expects a sizeable carryout of 350,000 tonnes. When there has been similar carryout in the past, prices have hovered in the $5 to $6 per bushel range.
However, Penner has seen new crop bids of around $8 per bu., which might entice some growers to plant flax despite the marketing challenges in Europe, a destination that used to consume 70 percent of Canada’s flax exports.
It certainly is doing so south of the border, where the U.S. Department of Agriculture forecasts a 23 percent increase in acres.
“If you look at it strictly from an economic basis, (the market) is not telling farmers to stop growing flax,” Penner said.
Flax stores well, so farmers may be willing to sit on supplies until prices increase or to sell into price rallies caused by desperate European buyers.
However, Penner warned growers that Russia and Ukraine have been filling the void in Europe caused by the disruption in sales from Canada. Growers there could be substantially boosting their flax plantings this spring.
