Flax prices too high, harvest pressure to weigh

(Laura Rance photo)

CNS Canada –– A late harvest and good nearby demand are keeping flaxseed prices artificially high, but spot bids appear to have room to drop by as much as $2 per bushel or more over the next month.

Spot flaxseed bids as high as $12.50 to $13 per bushel can currently be found in Manitoba and Saskatchewan, according to Prairie Ag Hotwire data. That compares with canola prices closer to $8.50 per bushel.

“Once the harvest hits, put your seatbelt on,” said Grant Fehr of Legumex Walker at Morden, Man. Flaxseed was currently overpriced by $2-$3 per bushel compared to canola, he said.

The relative strength was tied to the delayed harvest, coupled with existing contracts that still need to be filled, he said.

He expected flaxseed prices would head down to $11 per bushel over the next month, as the harvest moves forward and more new-crop supplies become available.

Fehr estimated 2014-15 Canadian flaxseed production at about 900,000 tonnes, which would compare with the 712,000 tonnes grown the previous year.

Quality was still uncertain, he said, with frost damage a possibility in some areas. As a result, there could be premiums from the food sector for higher-quality supplies.

In addition to the bigger Canadian crop that will soon be weighing on flaxseed prices, Fehr said Europe also had a large crop. “Right now, it appears that the flax crop in Eastern Europe will supply all of Europe this year.”

Existing contracts to the European Union, of 50,000 to 120,000 tonnes, will be executed, “but then it will dry up,” said Fehr.

Beyond Europe, the flaxseed market will also be watching the demand out of China, as that country has lowered its bids over the past month.

Logistics issues acquiring rail cars to move flax could limit some export movement, as the crop “is the bottom one on the totem pole” compared to wheat and other crops, said Fehr.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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