This week, we examined the flaxseed market. The main driver of our interest is that cash prices have been strengthening overall for months despite harvest going on now and production being up versus 2019. Relative to other crops in Canada, the flaxseed market is small.
Average flax prices across Canada were on the rise in March then fell sharply in May. After flatlining for a while, prices are on the rise again despite fresh supplies as harvest progresses. Flaxseed was 98 percent harvested in Saskatchewan and 86 percent in Manitoba this week.
Exports make up a notable portion of the balance sheet. As a percentage of production, exports have averaged 87 percent over the past decade. The top takers are China, the U.S. and Belgium. Mexico takes a minor amount of flaxseed as well. Dating back to 2014, Canada has exported flaxseed to these four countries only. The most exported in one crop year was 920,000 tonnes. But, monthly and weekly export data do not align with what is reported as final export data. Typically we see larger final volumes than what we see in the monthly and weekly data. We started off the 2020 export season strong, but we flatlined in September. Seasonally, we see a jump in exports from November to January.
Flaxseed production is forecast at 21.7 million bushels per Statistics Canada’s latest report, which is up from last year’s crop at 19.1 million and would be the largest harvest since the 2017 crop as production has been declining since 2015. Saskatchewan produces about 75 percent of the Canadian crop. Production is forecast to be up marginally versus last year, but stocks are forecast to continue to remain light versus a few years ago. We assume that exports will exceed last year’s volume based on strong consumer demand as well as strong feed demand.
The flaxseed balance sheet is expected to remain tight this year despite a marginally larger crop, partially because stocks were snug heading into the crop year. But, FBN® leans towards COVID-19 being a supportive element to the flaxseed industry overall, with domestic feed demand having a strong finish in the April-July quarter. We do not see substantial weakness overall throughout the crop year for flaxseed prices but encourage producers to take advantage of the current strength in the market and move to 75 percent sold as per the latest recommendation.
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