World markets are paying close attention to Saskatchewan’s mustard and canaryseed harvest.
Saskatchewan is the dominant player in the global production of both commodities. Yield and quality help determine the price of both crops.
And the way things are shaping up, there should be upward pressure on mustard and canaryseed prices because acreage is down and yields are expected to be below normal.
Kevin Hursh, director of the Canaryseed Development Association of Saskatchewan, said canaryseed went into the ground late and is now suffering from the heat and drought-like conditions that have affected much of the province this summer.
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“Conditions like this year, where we’ve got the heat turned up and the tap turned off in June, probably hurt later seeded crops more than an earlier seeded crop like peas.”
Where he farms near Cabri, Sask., the canaryseed crops are already ripe and look “pretty meagre.” He suspects the story will be worse in areas farther south.
“The canaryseed crop in many areas will not be a good crop,” said Hursh.
Steve Foster, special crops trader with Saskatchewan Wheat Pool, said the crop looks better than it ever has around Regina and he hasn’t heard anything overly negative from the Kindersley-Rosetown area or the province’s northeast.
But there are problems in the province’s southwest and he is telling buyers from Mexico and Europe to stock up at today’s prices rather than waiting for harvest to end.
He is trying to sell the crop at prices that work back to 10.5 cents per pound to the grower, but buyers aren’t biting despite his warnings that the asking price will likely rise once the crop comes off.
“They’re not booking anything at this point in time and I keep saying we could see more upside.”
The story is similar for mustard, although the upside potential is more limited, said Foster.
Nearly one-quarter of Canada’s mustard crop is grown in southwestern Saskatchewan, the hottest and driest region of the province.
While mustard can handle the heat better than other commodities, Foster expects provincial yields to average 600-700 lb. per acre, down from the norm of 750 lb.
That jibes with a July 27 market report from Louis Dreyfus Canada that says there is a possibility that the hot weather has “significantly damaged” mustard yields. The company said the smaller-than-expected 2006 crop could have a significant impact on prices, especially if there is little high quality seed.
But Foster doesn’t see prices rising too much because there were 175,000 tonnes of carryover supplies to start the year and there will probably be enough new production to meet demand as long as the quality is there.
“I think we’re still going to see values trade in this 13-15 cents per lb. range over the balance of the year.”
That said, harvest has just begun and further complications such as hailstorms could change the outlook.
“On the mustard it’s not going to take much to see this thing move up a bit. Are people going to freak out and it’s going to go to 20 cents? I don’t think so, but stay tuned,” Foster said.
Josef Boersch, president of Boersch Farms Ltd., a canaryseed dealer in Indian Head, Sask., said growers hold all the cards when it comes to that crop.
He estimates yields will be about 10 percent below normal, which would result in a 100,000 tonne crop based on Agriculture Canada’s latest supply and disposition report.
That will be plenty to satisfy demand given the 185,000 tonnes of canaryseed carried over from last year.
But the key will be whether growers are willing to sell at the current price of 10 cents. He said many growers have already sat on supplies for one year, speculating that the price will rise.
“If they didn’t need the money last year, they most likely are not going to need it this year. It is going to become a seesaw battle between demand and what becomes available.”
CGF Brokerage and Consulting, a Saskatoon-based grain broker, said things are in place for a higher price trend of 13-15 cents a lb. for canaryseed by the 2007-08 crop year.
Hursh said that might be close to the mark. He doesn’t expect a huge price spike like in 2002 because there hasn’t been a complete disaster, just a gradual deterioration in crop conditions.
“I’d have a tough time believing that we’re going to see (prices) take off, but we might be in a situation that we’re tight enough that we could be pretty sensitive to next year’s seeded acreage.”
