Mustard slightly fallingMustard is a crop that, relatively speaking, is moving. Granted, there’s probably some December contracts still waiting to be delivered and if you want to move it today, it will probably be at a bit of a discount.
By: John Duvenaud,
WINNIPEG, Manitoba — Mustard is a crop that, relatively speaking, is moving. Granted, there’s probably some December contracts still waiting to be delivered and if you want to move it today, it will probably be at a bit of a discount.
Mustard prices are falling but not by very much. Mostly they’re still in the same ballpark as a year ago, which, given the collapse in wheat and canola, is pretty good. Mustard production in 2013 was up to 165,000 metric tons, but supplies are actually down modestly as the large stocks that have been depressing prices for years have finally been cleaned up.
The 2013 crop was about 340,000 acres, up from previous years. It was most likely 55 percent yellow, 35 percent brown and 10 percent Oriental. Yields were good. Brown and Oriental averaged 1,100 pounds per acre; yellow was 900 pounds.
Mustard is moving comparatively well and most of the 2013 crop should be gone by next summer. Processors report problems getting containers, and that can be frustrating but generally mustard is being moved.
Yellow is 30 to 32 cents per pound with quick movement. Most yellow goes to the U.S. so at least it’s not in the Vancouver line-up.
Brown goes to Europe and that movement is still working. If you’re selling brown, you should find 30 to 32 cents for quick delivery, maybe 34 cents if you fit yourself into a processor’s queue.
New crop mustard now pencils out at possibly the third-highest revenue per acre and No. 1 or two in net returns. Expect an expansion in mustard plantings this spring, perhaps by as much as 25 percent. The mix will likely be about the same as last year.
New crop bids for yellow are 32 cents per pound for off-combine delivery, 33 cents for delivery before the end of January and 34 cents for July 14.
Brown new crop is bid at 27 cents.
Canola market remains sluggish
This may sound like an old stuck record but nothing suggests a change in the canola price structure. Futures remain in a downward trend as large stocks continue to plague the commercial pipeline. A slight bounce in the soybean market tempered the downward movement more than a week ago, but this is temporary given the record large South American crop projections. Favorable weather in Argentina and Brazil in the next month will ensure crop development and early yield results in Mato Grosso are better than expected.
The weekly canola crush is only running at 135,000 metric tons per week, compared with more than 150,000 earlier in December. The crush to Jan. 15 was 3.1 million metric tons, compared with 3.3 million last year. Exports are also lagging.
As of Jan. 12, exports were 3.3 million metric tons, compared with 3.8 million last year. Given the slower exports and domestic crush, we project a carryout over 3 million metric tons, compared with 1 million in 2013 and 2014 and the five-year average of 1.9 million. The elevator system is plugged until June or July with limited delivery opportunities. Domestic crushers are accepting deliveries, but there are plentiful stocks to chew through.
Many farmers have not sold much. Expect an onslaught of farmer selling later in the crop year.
We do not see any reason for the market to change course. We expect an increase in canola acres for 2014 and if average yields materialize, the carryout levels will remain burdensome for the 2013 to ’14 crop year.
We are also expecting a slight increase in U.S. soybean acres, given the price relationship to corn.
The durum market in Western Canada is facing the same obstacles as milling wheat and canola, with limited delivery opportunities in the next three to four months. Fobbing capacity is basically booked up on the West Coast until June and tight rail logistics is limiting export offers until summer in Thunder Bay and St Lawrence. Durum is currently 60 percent sold and is waiting until the logistical system improves. Currently, export offers and interior values have divorced and we find export values at a sharp premium over the normal spread from elevators in Saskatchewan to export terminals.
Canadian durum exports are running at a similar pace as last year, but we are projecting a Canadian durum carryout near 2.5 million metric tons, compared with 1.1 million last year and the 10-year average carryout of 1.9 million metric tons. We expect a marginal decline in acres in 2014 and once the rail logistics improve, we should see the export pace increase in the final quarter of the crop year.
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