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Tight Supply Of Flaxseed Confirmed

Fears of tight flaxseed supplies in Canada were confirmed by the Feb. 4 stocks report from Statistics Canada, which showed only 453,000 tonnes as of Dec. 31, 2010, as opposed to 843,000 at the same time one year ago.

Although total stocks are very low, Chuck Penner of Left Field Commodities in Winnipeg, said the market has already factored in the tight stocks.

“I don’t think it was entirely unexpected. The trade is working with very low stocks already, so it seems to be the type of situation where the industry knew (stocks) were very tight and prices have already largely responded to that,” Penner said.

Penner said flax acres are expected to increase from the 925,000 acres planted in 2010, as reported by StatsCan.

“The farmers aren’t going to worry about the low stocks numbers, they’re just going to look at the bids,” he said. “We are seeing some historically very nice bids for both spot and new crop, so it’s holding out quite well against other crops in terms of returns per acre.”

Penner said he thinks prices will see a bit of a bump with the confirmation of tighter stocks, but didn’t expect to see values go all that much higher.

“Some producers are holding out until $20 per bushel, but I’d be surprised if we get there. I think we’ll cap out probably around $16.50 to $17 (per bushel) ballpark,” he said. “Most people who have been growing flax for years know that these are very good values. The only problem is everything else looks really good as well.”

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