Higher prices ration flaxseed demand

(Commodity News Service Canada) — High flaxseed bids are causing end users to ration demand, slowing the reduction of Canada’s tightening supplies.

Flaxseed bids as high as $15.75 per bushel, FOB farm, can currently be found in Manitoba and Saskatchewan, according to the latest Prairie Ag Hotwire data. Market participants said prices were hitting $16 per bushel in some limited cases.

The fact that flaxseed prices are at their highest levels of the past year is largely a function of supply and demand, given Canada’s sharply reduced production.

Canada grew 423,000 tonnes of flaxseed in 2010-11, down from 930,000 the previous year, according to Statistics Canada data. Forecasts call for ending stocks to dwindle to the very tight level of 50,000 tonnes by the end of the current crop year.

A Manitoba-based flaxseed merchant said the question now is “How high flax will go?”

While supplies are definitely tight, he said, the upside may be limited as demand was being rationed and there was also not enough flax in position to fulfill a big export program.

While Belgium is the largest destination for Canadian flaxseed exports that go through the necessary protocols, shipments to Asia had made up for some of the business lost to Europe over the genetically modified Triffid flax issue in recent years.

However, the merchant said those price-sensitive customers were buying less at current prices.

Looking ahead to the spring, the merchant said new-crop flaxseed pricing opportunities could be found around $10 per bushel, with some limited contracts hitting $14.

Flaxseed, he noted, will be competing against the strong canola market and other attractively-priced crops at seeding time and will need to maintain a premium in order to get the acres in.

Moisture conditions in the spring will also play a role in determining the eventual acreage breakdown, with soils already saturated in many areas of Saskatchewan and Manitoba.

About the author

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

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