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Drop Seen In Canadian Flax Output

Canadian flaxseed production in the upcoming 2010-11 crop year is expected to be down significantly from the level achieved in 2009-10, based on data presented at the Canadian Wheat Board’s Grain World conference by Informa Economics Inc.

Chuck Penner, senior consultant with Informa Economics Inc. estimated 2010-11 Canadian flaxseed output at 742,000 tonnes, which would compare with the 2009-10 level of 930,000.

In comparison, the market analysis branch of Agriculture and Agri-Food Canada in its January 28 supply-demand update estimated 2010-11 Canadian flaxseed production at 625,000 tonnes. Canadian producers were seen seeding 1.3 million acres to flaxseed in the spring of 2010, based on Informa data.

That would represent a decline from the 1.71 million acres seeded to the crop in the spring of 2009. The decline in seeded area reflected the poor price outlook for the crop.

Penner said the poor price outlook was tied to the EU suspension of Canadian flaxseed imports due to CDC Triffid, a genetically modified contaminant. Clearing up the GM issue with the EU is likely going to be a matter of years, not months, Penner said.

He said that flaxseed prices in Canada have been holding up as producers have been reluctant sellers of the commodity into the cash pipeline. However, at some point those sales will occur.

Penner said the market needs to see at least a 25 per cent reduction in flaxseed area in 2010 to prevent supplies from becoming overly excessive.

However, despite the drop in production, exports of Canadian flaxseed in 2010-11 were seen rising fractionally to 550,000 tonnes from the 2009-10 forecast of 545,000, Penner said. During the 2008-09 season, Canada exported 626,000 tonnes of flaxseed.

Total domestic use of Canadian flaxseed in 2010-11 was projected by Informa Economics at 190,000 tonnes, which would compare with the projected 220,000 in 2009-10.

In 2008-09, Canada processed 181,000 tonnes of flaxseed. Penner said the low export of flaxseed will lead to an increase in ending stocks. Penner pegged 2010-11 Canadian flaxseed ending stocks at 409,000 tonnes, which would be up from their 2009-10 estimate of 402,000. In 2008-09 Canadian flaxseed carryover totalled 227,000 tonnes.

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