Commercial, conventionally-grown flax has climbed to $20 per bushel in value this week, net to farmers
in various parts of the eastern Prairie growing region. Elevators’ posted bids have been below
this, but some have hit $20/bu. targets, and a few other types of buyers including local processors
and brokers have been paying this lately as well.
In normal times, one might expect a wave of farmer selling at such an attractive, round number.
But we might not see that this summer, due to a combination of factors. Supplies are tight, most
Flax prices have been extremely volatile in the past few months, as have supply levels over the
past few years. FarmLink forecasts 2007-08 ending stocks to fall to pipeline levels of around
35,000 tonnes, compared to 376,000 tonnes at this time last year and the 5-year-average carryout
of 173,000 tonnes.
Somewhat surprisingly since prices have been historically high, heading into 2008-09 there is
little downside threat to the flax market from the supply side. Statistics Canada confirmed in its
June acreage report that plantings will be insufficient to meet normal demand for the year, and
there are pockets of poor crop progress that have some farmers ratcheting down their yield
The demand side is strong as well, although it is difficult to track in the absence of data on
domestic usage for milling and crushing. We do know that consumption for new specialty uses
has been growing, such that flax should be able to hold its own even if the vegoil complex were
about 80 per cent of world production and trade.
Flax demand has turned highly price-inelastic, as evidenced by the ease with which prices have
risen in recent months. Cash prices almost hit $20/bu. in early March, then dropped off quickly to
$13/bu. as outside markets collapsed in the last half of the month. Since that time, prices have
gradually but steadily worked their way higher, often moving by 50 cents/bu. per week, due to the
fact supplies are very thin and end user demand hasn’t been fully rationed.
– The FarmLink Market Insight was researched and produced by FarmLink Marketing Solutions, a marketing advisory service for Prairie farmers, and is published here with permission of the authors.