The western Canadian flax cash market seems to be coming down from recent highs. Fresh demand from China and Europe helped values rally recently, but the market in Europe has leveled off and Canadian cash prices seem to be following along.
Chuck Penner, president of LeftField Commodity Research in Winnipeg, said he’s not sure if China will be willing “to chase the market much higher,” so values may have found their highs for now — but that doesn’t mean prices can’t climb again.
According to Prairie Ag Hotwire, spot bids for old-crop flax across Western Canada ranged from $13.50 to $16.63 per bushel on Monday, down from $16.50-$17.32 per bushel on Friday.
The recent price rally was supported by the tight supply situation in Canada, though some farmers have been taking advantage of the rally and delivering steady amounts of flax into the cash pipeline.
“There might be a little bit more flax out there than what the official Statistics Canada numbers suggest because farmers have continued to deliver at a fairly decent pace,” said Penner.
Statistics Canada’s latest stocks report, released Friday, reported flax supplies in Canada totaled 264,000 tonnes as of March 31, down from 327,000 at the same time in 2012.
But some farmers are still holding onto their crops.
“Some people like to wait for even higher prices,” said Penner. “There are always a few that wherever the price goes, they just keep setting their target price a little bit higher.”
Penner said Canadian cash prices for flax will probably continue to be on the strong side until we get closer to the harvest of new-crop supplies.
“Once buyers have enough flax to carry them through the new crop harvest, then that’s when we’ll start to see prices start to decline a little bit,” said Penner.
New-crop values are also reported as being strong, in an attempt to encourage acres to keep up with increased demand. Prairie Ag Hotwire shows new-crop values in Western Canada in the $14-$14.50 per bushel range on Monday.
“We very rarely, if ever, see new-crop prices that are at $14 a bushel; that’s very, very unusual,” said Penner. “While it’s lower than what the current spot bids are for old-crop, it’s still very profitable and I think that’s bought some acres both in Canada and the U.S.”
Strong prices elsewhere in the world, such as in Russia, Ukraine and Kazakhstan, may also encourage more acres, which could mean larger global production in 2013-14.
“It’s making me a little bit nervous about how many extra acres (of flax) there will be this year and whether the demand next year will be just as strong,” said Penner.
Statistics Canada reported that as of March 31, farmers in Western Canada planned on seeding 1.24 million acres of flaxseed this spring, up from 980,000 acres in 2012 and 739,743 in 2011.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.