CNS Canada –– Spot prices for flax in Western Canada have dropped off in the last couple of days, reacting to expectations of large new-crop production in other parts of the world.
“If you look at the main line companies, they’ve gone from C$13 to $14 a bushel, down to $11.60,” said Grant Fehr, flaxseed position manager at Legumex Walker. “That tells you where the market is heading. It’s in anticipation of the new crop coming.”
The market is also pricing in expectations of higher flax acreage in Eastern Europe, which is weighing on prices, as is a lack of demand coming out of Asia.
“The whole market has just slowed down,” Fehr said. “When you see soybeans, corn and wheat take 30 per cent out of their values it’s hard to hold the value when you’re competing against them.”
The decline in prices comes despite some weather problems in Western Canada, including the need to reseed some fields in northern Saskatchewan following recent frost.
Damage from recent frost events is still being assessed and producers are starting to become more worried about a lack of moisture in parts of Saskatchewan.
There are also reports of excess rain in parts of Manitoba’s agricultural regions, but it’s too early to tell if that will cause any damage to flax crops, Fehr noted.
“You’ve got to remember, producers will kill that crop two or three times yet before harvest,” he added.
Where the market is in a month from now could be completely different, with western Canadian weather conditions likely to start influencing prices more.
“If we don’t get rain in Saskatchewan, this market is going to hold firm instead of going down,” Fehr added.
Traders will also be watching the June 30 Statistics Canada planting intentions report, as it will give a clearer picture to how many acres of flax got in the ground this spring.
In late April, StatsCan pegged 2015 flax area at 1.63 million acres, up from the 1.56 million planted the year prior.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.