Tuesday's release of the Exports of grains by final destination report shows flax exports rebounding sharply in March, with 75,210 metric tons exported, up from 32,150 mt shipped in February. Total shipments to the end of March are 420,362 mt, down 14% from the 489,540 mt shipped in the same period last year (August through March) but 28.2% higher than the five-year average.
This leaves cumulative sales approximately 13,000 mt, or 3% below the cumulative volume needed to reach the current AAFC target of 650,000 mt for the 2015/16 crop year, which would be the first year-over-year drop in exports seen in four years.
Given the month-ove- month increase in exports of 43,060 mt, 36,977 mt or 86% of the total volume was moved to China, with exports to that country accounting for 59% of the total volume year-to-date at 248,476 mt, up from last year when total exports to China for the 2014/15 crop year accounted for 50% of the total volume.
With March 31 stocks reported at 571,000 mt, up 49.5% from March 2015 and the largest March 31 stocks reported since 2010, ending stocks are poised to move sharply higher which should lead to revised AAFC targets this month. In 2014/15, the April-through-July disappearance totaled 285,000 mt, while the five-year average is 235,000 mt. Given the largest April-through-July disappearance in the past five years of 297,000 mt, ending stocks would swell to 274,000 mt from 97,000 mt in 2014/15, from the current AAFC estimate of 180,000 mt released in April. Given this best-case scenario, the stocks/use ratio would jump from 11% in 2014/15 to over 30% using current AAFC projections.
Support may come from Statistics Canada's estimate for a 32% reduction in flax acres in 2016 to a three-year low of 1.115 million acres. Flax acres face challenges with higher returns from competing crops, with pulses likely to replace some flax acres.
The Flax Council of Canada reports today's Saskatchewan bid at $425.90/mt, or $10.82/bu. This is down from Saskatchewan Agriculture's $491.69 near the beginning of the current crop year and the $553.08/mt reported this time last year.
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