The prolonged bon voyage party for old-crop flax held some fireworks for farmers who were fortunate enough to be delivering their newly harvested seed.
“There’s $8-a-bushel bids for canola and flax at the same time, and it’s very rare that the guys get the same value for both crops,” notes grain marketing consultant Dulcie Price, of Optimum Agra.
And while the recent push behind flax prices will come to an end, analysts say prices might strengthen later in the year.
The outlook wasn’t nearly as good this spring when the trade expected a big increase in acreage and export demand was slow.
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July saw below average temperatures, August came in with near to slightly above average temperatures and September built on this warming trend with well above average temperatures for the month.
But farmers planted fewer acres than expected, and weather concerns stirred the market. Yields are expected to vary and run slightly below average on the whole.
Agriculture Canada’s oilseed analyst Lyndon Peters said total supplies will go up only seven percent from 1996-97.
“We’re only talking about marginally larger supplies of flaxseed, really,” he said.
Prices started rising as grain companies tried to entice farmers to deliver old-crop flax. But there wasn’t much left.
Peters said he was surprised by a recent Statistics Canada report that pegged ending stocks at a mere 80,000 tonnes. He’d expected 120,000 tonnes.
“Demand outstripped the selling side of it,” said Lawrence Yakielashek, export marketing manager with A.C. Toepfer (Canada) Ltd.
He said European crushers started to buy Canadian flax after German and British farmers encountered production problems.
American crushers were also in the market. Peters noted U.S. demand rose to 230,000 tonnes from 1995-96’s 180,000 tonnes.
Canadian crushers also bought flax, probably to sell linseed oil to China.
In 1996-97, crushers used 293,000 tonnes of flax, compared to 175,000 tonnes the previous year, said Peters.
“It (domestic demand) has given the flax market some buoyancy that it hasn’t had for awhile,” said Price.
By Sept. 15, farmers had harvested less than 30 percent of this year’s flax.
But once new-crop supplies are available , analysts expect prices to soften.
“Once the crop comes off and the pipeline is refueled, I think that the market could pull back maybe 30, 40, 50 cents a bushel,” said Price.
In the short term, growers should take advantage of strong prices, said Price.
“They shouldn’t get greedy and they should take what they can get if they have the opportunity to get their flax off right away,” advised Price.
Analysts say farmers should sell at least a third of their crop at current levels, but expect more opportunities later in the crop year.
