Sales to Western Europe expected to be stagnant
A grain trader who recently travelled to Asia says China wants to buy flax from Canada and that demand for the oilseed will be strong during the next year.
Grant Fehr, flax and special crops manager with Keystone Grain, a grain processor and marketer in Winkler, Man., met with grain dealers while visiting China in late April.
He said he learned that Chinese oilseed buyers want and need flax.
“They need oil-based products. They can’t get enough soybeans, they can’t get enough canola, they can’t get enough flax and they can’t get enough cottonseed,” he said.
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“South America’s lack of soybean production means we have to look for alternative oils, flax being one of them…. The (flax) demand from China will continue to be strong for the next 12 months.”
The higher demand has resulted in stronger prices for prairie flax growers. New crop contracts are $14 a bushel, $2 higher than this winter.
Statistics Canada’s April 24 forecast estimated that farmers would seed 1.04 million acres to flax in 2012.
The agency had estimated 1.2 million acres last year, based on farmer intentions in March, but only 695,000 acres were planted because of flooding in southeastern Saskatchewan and southwestern Manitoba.
Flax Council of Canada president William Hill hopes Chinese demand, higher prices and improved seeding conditions this spring will attract more flax acres in Manitoba and Saskatchewan.
“We’d like to see the acreage above one million acres, and we hope to get there in the next little while,” he said.
Fehr said several Chinese grain buyers told him they preferred to deal with Canadian flax exporters.
The preference might be related to Chinese trade quarrels with flax growing countries such as Kazakhstan, Russia and Ukraine, he said.
“Right now there’s some trade disputes going on between Eastern Europe and China.”
Those disputes, combined with Europe’s reluctance to accept Canadian flax because of the discovery of genetically modified Triffid in Canadian shipments, means the global flax market has shifted.
A few years ago Canada shipped 500,000 tonnes of flax to countries like Germany, France and England, but European concerns over GM contamination will reduce Canadian exports to 20,000 to 30,000 tonnes this year, he said.
“We’re kind of re-routing the crop,” he said. “Their (Eastern European) seed goes to Europe and our seed goes to China.”
Fehr said the Western European market for Canadian flax will probably be dormant for a while.
“Our Triffid issue, it was more than a black eye. It broke our jaw. I think our European market is going to stutter for at least another five years.
“We’ve lost their confidence. Once you’ve lost a customer’s confidence, it’s very difficult to get it back.”
