(Resource News International) — Cash bids for flaxseed in Western Canada have been holding steady to firm, and were expected to see some additional strength given the uncertainty due to the excessively wet conditions.
“There will likely be some flaxseed that may not get into the ground in both Saskatchewan and Manitoba due to excess moisture and there certainly has been some acreage that had been planted that is suffering yield loss,” said Richard Zacharias at Prairie Flax Products at Portage La Prairie, Man. “The weather is definitely a concern.”
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He acknowledged that demand from end-users has not picked up in any significant way, with most continuing to sit on the sidelines to see if Canadian production will be impacted negatively or not.
End-users remain convinced that between large old-crop flaxseed supplies and new-crop output, supplies of flaxseed will be enough to cover their demand.
However, there are ideas that flaxseed supplies in Canada will be a lot tighter next year at this time.
“There has been a greater draw down of old-crop flaxseed supply than had been anticipated, and now with the wet weather threatening new-crop production, flaxseed supplies are going to tighten significantly,” a cash dealer said, not wanting his name used.
At one time, the dealer said, it wouldn’t have been unreasonable to believe that 2009-10 flaxseed ending stocks would be in the 400,000- to 500,000-tonne range given the absence of European demand.
However, steady purchases of Canadian flaxseed by China will result in flax carryover in 2009-10 dropping into the 250,000- to 270,000-tonne range. Carryover stocks of Canadian flaxseed in 2008-09 were 227,000 tonnes.
“China is certainly not willing to chase flax bids higher, but on the other side of the coin, they are reducing the supply base,” the dealer said.
The dealer felt the smaller carryout estimate for flaxseed in 2009-10 combined with the wet weather production problems could see flaxseed ending stocks by the end of the 2010-11 crop year in the 100,000-tonne range, which would be extremely tight and supportive for the cash market.
Cash bids for old-crop flaxseed delivered to the elevator in Saskatchewan, based on Prairie Ag Hotwire data, currently range from $7.80 to $8.16 a bushel, in Manitoba from $7.85 to $8.48 and in Alberta from $7.88 to $8.05.
Cash bids for old-crop flaxseed delivered to the elevator in Saskatchewan, based on Prairie Ag Hotwire data, on May 5 ranged from $7.85 to $7.93 a bushel, in Manitoba from $7.89 to $8.12 and in Alberta from $7.82 to $8.05.
