Flax prices decline amid above-average yields

Canadian flax prices have declined as much as $1 per bushel since August — a slip credited to reports of very good yields across the Prairies and increased production expectations for the 2013-14 season.

“Right now we’re $13.50 per bushel delivered to plants in Saskatchewan and $14/bu. in Manitoba,” said Grant Fehr, flax and special crops manager with Legumex Walker’s Keystone Grain division at Winkler, Man. “They’ve probably backed off about 50 cents to $1 a bushel since August.”

Based on reports from growers he’s talked to, yields appear to be up significantly this season, Fehr said.

“I think yields are up about 20 per cent,” he said. “Statistics Canada is calling for 25 to 26 bushels per acre, but I had one grower tell me yesterday that he had 31 bu./ac., which is a really good yield for flax.”

“With our extra yields, instead of having 450,000 to 500,000 tonnes available, we’re looking at 600,000 to 650,000 tonnes.”

Competition on the global export market has increased, Fehr said, as the Black Sea region expects a large crop as well. However, Asia will remain a big player in terms of imports again this year, which could help bring stability to prices.

“I’m hearing reports that we could see 900,000 tonnes of flax come out of Eastern Europe, which is a huge crop for them,” he said. “It’s basically going to cut off export demand to Europe, which was minimal anyways. The Chinese have basically filled that void anyways, so it’s not surprising.”

“I’m expecting China to take 250,000 tonnes this year, with the possibility that it could be as high as 300,000 tonnes.”

However, Fehr said despite expectations of large exports to China, they are set until December.

“Demand-wise, we’re fine so far,” he said. “But until December, the Chinese basically have themselves covered. It’s what demand is going to be like going into the new year that will be interesting.”

According to Agriculture and Agri-Food Canada’s September outlook for principal field crops, Canadian exports are expected to increase by 14 per cent in 2013-14, with China and the U.S. being the main importers of the product.

Fehr warned, however, that some Black Sea flax could make its way into the Chinese marketplace.

“The question is going to be if the price (of Black Sea flax) is low enough where it’s going to work to run product through Vietnam, going into China,” he said. “You cannot export flax to China from Eastern Europe, so what’s happened in the past is that they’d go through Vietnam.”

— Brandon Logan writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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