Canaryseed bids edge higher as supply tightens

Argentina is the only other canaryseed exporter of significance, and growers in that country have cut their acres in half.  |  File photo

Brown mustard prices are likely dropping, yellow may have modest upside and oriental values are expected to be flat 

REGINA — Price forecasts are all over the map for Canada’s special crops.

Chuck Penner, an analyst with LeftField Commodity Research, provided outlooks for canaryseed, mustard, sunflowers and flax at the 2018 Pulse and Special Crops Convention.

He was bullish canaryseed, partly because of reduced export competition.

Penner thinks farmers planted more than the 223,000 acres of the birdseed crop that Statistics Canada is reporting.

However, partly because of low carryout, he is forecasting 200,000 tonnes of supply, which would be the smallest since 2011-12.

Argentina is the only other exporter of significance. Growers in that country cut their acres in half, and production is also expected to be halved to 21,000 tonnes.

“We’re already starting to see some of the implications of that smaller Argentine crop,” said Penner.

Canadian exports to Brazil are on the rise.

He is forecasting 30,000 tonnes of Canadian carryout, which would be much smaller than the last three years.

“We’ll probably see a fairly sizeable drop in ending stocks. I might be overestimating it slightly, but I see canaryseed supplies tightening up,” said Penner.

Bids for the crop are already edging higher, as are U.S. bids for millet, which is also supportive for canaryseed prices.

Nathan Buhler, senior commodity trader with Scoular Canada, wasn’t as optimistic as Penner. He is forecasting flat demand and 50,000 tonnes of carryout.

The mustard outlook depends on type. Brown mustard prices are likely heading down, yellow may have modest upside and oriental values are expected to be flat.

Growers planted an estimated 175,000 acres of brown mustard, a 130 percent increase over the previous year. That is forecast to result in 80,000 to 85,000 tonnes of production, an increase of more than 200 percent.

By contrast, yellow mustard was pegged at 245,000 acres, a nine percent increase. Production is forecast at 90,000 to 95,000 tonnes, a 50 percent hike.

Oriental mustard was pegged at 80,000 acres, a three percent increase. There will be 35,000 to 40,000 tonnes of production, but much of the 30,000 tonnes of carryout from 2017-18 is oriental mustard.

Mustard production in the U.S. has been way up the past three years with 90,000 tonnes forecast for 2018-19.

“This tends to produce some softness in the market,” said Penner.

Russia is also expected to harvest a large crop of 100,000 tonnes, which will cut into European demand for Canadian product.

Canadian exports have been disappointing in 2017-18 because of big U.S. and Russian crops.

Penner is forecasting 77,000 tonnes of carryout, most of which will be brown mustard.

Kyle Ulmer, a grain merchandiser with Viterra, disagreed with Penner on one important part of the outlook. He thinks farmers planted closer to 400,000 acres than 500,000 acres.

He believes some growers will lock their bins waiting for a “home run” because of the crop’s tendency for price volatility.

“They might view that as their retirement in a bin,” said Ulmer.

Growers seeded 80,000 acres of sunflowers with 60 percent being oil types and 40 percent confectionary.

U.S. growers seeded about 1.5 million acres with the vast majority being oil types.

Canadian exports to the U.S. have been steadily declining. About 10,000 tonnes crossed the border during the first 10 months of 2017-18.

Penner said decreased acres of confectionary types in Canada and the U.S. will provide price support and help confectionary types maintain a healthy premium over oil types.

When it comes to flax, Penner said tightening supplies are good news for the crop.

He is forecasting 650,000 tonnes of total supply based on average yields, which would be the third consecutive year of decline.

“The supplies simply are not adequate to meet the market requirements, so that’s going to be supportive for prices,” he told delegates.

Buyers in the United States will likely get what they need, but China may have to look to Russia to help meet its requirements.

U.S. planted area is way down at 170,000 acres, a 43 percent drop from last year. Yields are forecast to recover, resulting in about 85,000 tonnes of production, but that is still a 15 percent smaller crop.

The U.S. produced a monster crop of flax in 2015, causing prices to crash. After three straight years of big acreage drops, U.S. flax bids are finally recovering and helping elevate Canadian prices.

Penner is forecasting continued price appreciation in 2018-19.

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