The highs may be in for the Prairie flaxseed market, with end-users covered for the time being as attention turns to the 2022 crop.
Analyst Marlene Boersch of Mercantile Consulting said there is a greater potential for Canadian prices to move lower than higher, unless supplies run out somewhere else in the world, forcing buyers to return to the Canadian store. Meanwhile, US end users are thought to be covered for the time being, while other buyers in Europe and China have access to flaxseed from Russia and Kazakhstan
"(Canadian flax) is expensive relative to other markets," Boersch said Tuesday as part of virtual presentation at Crop Production Week in Saskatoon.
Flaxseed bids currently top out at about C$41/bu in Saskatchewan, down about $3 over the past month.
Canada's freight advantage to Europe has decreased in recent years, due primarily to high ocean freight rates. That means it is more difficult for Canadian flax to remain competitive with supplies from Russia and Kazakhstan that moves via rail, Boersch said, noting that those two countries have also increased their flaxseed production over the past few years.
Drought conditions in 2021 cut into Canada's flaxseed crop with total production down 40% on the year, at 346,000 tonnes, according to Statistics Canada. Boersch estimated that actual production may have been even lower, which will lead to a very tight carryout situation.
Canadian flaxseed exports are already running well behind the year-ago pace, and Boersch questioned if even the relatively low projection of 300,000 tonnes total exports for the year would be possible.
Looking ahead to the 2022 growing season, Boersch said there is chance Canadian flax acres will increase from last year. However, she noted strong competition from other crops may limit that increase to only 5% or so. With a return to average yields, Canadian flaxseed supplies could be back up to 600,000 to 650,000 tonnes for the 2022-23 marketing year, which would result in a much more comfortable stocks-to-use ratio, she said.
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