Grain producers would normally be aghast to hear that prices will be
dropping by 62 percent.
But those attending last week’s annual meeting of the Saskatchewan
Mustard Growers Association took the news in stride.
That’s because they know spot market prices for yellow mustard as high
as 60 cents a pound are an aberration, reflecting an uncomfortably
severe shortage of uncontracted product.
And they know the price forecast they got for the 2002 crop – contract
prices in the range of 22 to 23 cents a lb. for yellow mustard –
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represent a 30 percent increase over what contractors were offering
last winter.
“It’s approximately what I expected,” said association president Brad
Meinert, a farmer from the Shaunavon, Sask., area.
A price of 23 cents a lb. translates into a decent return for most
mustard growers, he said.
“Last year I was willing to contract at 17 cents and that would have
covered my cash and fixed costs. So 23 cents is a profitable level.”
The price forecast came from market analyst Steve Gadient of
Saskatchewan Wheat Pool, who told the growers they can expect to see
steady demand for the mustard they grow this year.
“We’ll see good movement of the 2002 crop at high prices,’ he said.
“The potential returns are very good in comparison with other crops.”
As a result of last year’s drought-reduced crop, carryout stocks on
July 31 are expected to be a meagre 14,700 tonnes. The supply pipeline
needs to be replenished and that will be reflected in steady and
stronger prices.
“We will see an increase in demand because customers need mustard,”
said Gadient.
He cautioned that his price projections are based on several crucial
assumptions, including average precipitation, a doubling in mustard
acreage to 680,000 acres from 338,000, slightly below average yields
due to dry conditions, a low year-end inventory and no significant
change in mustard acreage in other countries.
Based on those assumptions, Gadient forecast the following contract
prices for 2002:
- Yellow – There’s a 40 percent chance contract prices will be 22 to 23
cents a lb., a 35 percent chance of 20 to 22 cents, a 15 percent
chance of prices over 23 cents and a 10 percent chance of prices under
20 cents.
- Brown – There’s a 50 percent chance contract prices will be in the
range of 17.5 to 18.5 cents, a 30 percent chance of 16 to 17.5 cents, a
15 percent chance of prices over 18.5 cents and a five percent chance
of prices under 16 cents.
- Oriental – There’s a 40 percent chance prices will be in the range of
16.5 to 17.5 cents a lb., a 30 percent chance of 15 to 16.5 cents, a 25
percent chance of prices over 17.5 cents and a five percent chance of
prices under 15 cents.
