Canada Markets

According to Agriculture and Agri-Food Canada, mustard seed is viewed to have the tightest supply situation of all of the special crops this crop year, with an expected 2015/16 carryout of just 5,000 metric tons or just 4% of expected demand.

Ending stocks of mustard have been estimated at 35,000 mt at the end of 2014/15, which is more than triple the estimated carryout from the previous year; 2015/16 seeded acres are expected to be down 35% from last year and an average estimated yield of 749 pounds per acre, the lowest since 2007, with production estimated at 109,300 metric tons, down 45% from 2014 and the smallest production since 2006/07.

Of course it may be anybody's guess just how much supply is available this crop year. Statistics Canada pegged the crop at 109,000 metric tons in its July estimate, reduced production to 77,400 mt in their model-based estimates then settled on 109,000 mt in its September estimates. It is possible that total production will be increased in the November estimates report. Perhaps supporting this notion is the notion that crop yields improved late season while many crops proved to be better than expected as harvest advanced. Statistics Canada increased its estimate of canola production by 1 million metric ton between the July estimate and the September estimate, while there are suggestions that this may still be conservative.

Perhaps another factor supporting higher-than-expected production is that Saskatchewan Agriculture estimated the average provincial yield at 1,047 lbs/acre as of Sept. 7, at a time when 45% of the crop was estimated to be harvested. This is well-above the recent Statistics Canada estimate of 732 lbs/acre for the province.

Exports for 2015/16 have been estimated at 110,000 mt, down from 126,000 mt in 2014/15. Today's release of August export data shows 9,516 mt exported for the month, a volume which is 2.2% higher than 2014/15, while 95.1% of the three-year average. The first month of the crop year saw exports ahead of the steady pace needed to reach the current 110,000 mt export target, which may continue to support prices.

As seen on the attached chart, producer bids delivered to Saskatchewan plants have seen prices for yellow and oriental mustard rally through harvest, given expectations of a tighter supply situation. Yellow mustard bids have increased 10% since the start of the crop year (Aug. 1) to today's bid of 44.5 cents/lb, while oriental mustard has strengthened 9% to 42 cents/lb. Brown mustard is showing the weakest response of the three, with today's bid of 30.67 cents/lb close to 1 cent below the Aug. 1 bid.

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

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(ES)

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