Canada Markets

After trading sideways for most of this calendar year, mustard prices delivered to Saskatchewan plants have shown a sharp increase in recent weeks.

Statistics Canada has forecast Canadian total supplies to reach 214,000 mt this crop year, which is down 14.4% from 2011/12 and 16.6% below the three-year average. Canadian production is forecast at 126,000 mt, which is consistent with last year's 125,000 mt but 27% below the three-year average. While harvested acres were higher this year than in 2011, carry-in stocks were sharply lower than the previous year.

Canadian exports are forecast to be 8.7% higher than last year, which brings exports to a more consistent level with past years.

Carry-out stocks are forecast at 60,000 mt, which is 31.8% below the 2011/12 carryout and 38.6% below the three-year average.

The United States experienced a sharp rebound in mustard production this year. Mustard acres fell from 71,500 acres in 2008 to 21,800 harvested acres in 2011, with production falling from 41.3 million pounds to 15.6 million pounds over that time. Mustard acreage is expected to have more than doubled in 2012, with harvested acres forecast at 53,100 acres. While final U.S. production numbers are not available as of the Nov. 9 USDA Crop Production report, Canadian estimates have pegged the U.S. production at 20 million pounds. The September 1 U.S. stocks report pegged the U.S. inventory within the grain handling system at 9.5 million pounds, or 181.1% higher than the September 2011, 3.38 million pound inventory.

As of Aug. 1, STAT Publishing reported oriental mustard to be priced 10% higher than its three-year average, yellow mustard prices 20% higher than its three-year average and brown mustard to be priced at 25% above its two-year average.

Since that time, Saskatchewan Agriculture data indicates that oriental prices have strengthened a further 2.3%, while yellow mustard has strengthened 10.9% and brown mustard strengthened 9.7%. Most recent prices as of Nov. 21 show oriental mustard at 26.3 cents/pound, yellow mustard at 39.75 cents and brown at 34.08 cents/pound.

Agriculture Canada's November forecast calls for an overall average price range for mustard at $710-$740/mt, or 32 to 33.6 cents/pound.

While Saskatchewan produces about 80% of Canadian mustard production, the Canadian prairies produces approximately 80% of world exports. The Saskmustard.com website highlights the importance of Canadian production on the world market with a humorous video prepared by television personality Rick Mercer who introduced the Northern Gateway Mustard Pipeline, being built to move product to the West Coast (after a seemingly doomed oil pipeline proposal with the same name).

The current environment would indicate producers have ample cash flow due to high commodity prices, while the deregulation of the wheat and barley market now allows producers to sell product as they choose. I believe this may affect special crop prices as crops such as mustard, which were historically viewed as cash crops, can now be stored while cash flow can be generated from a host of other commodities. This could possibly be very supportive to special crop markets.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

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