January 4, 2019

Market Developments

  • Our first forecast of 2019 mustard seeded area calls for 375,000 acres, a 26% reduction. That would put 2019 acreage toward the lower end of the acreage spectrum of the past 10 years and would continue the pattern of the past five years with boom and bust fluctuations.
  • The acreage change wouldn’t be consistent across the various mustard classes however. Now that brown mustard bids have lost their premium, we would expect acreage to drop back to a more normal level of 90,000 acres, 48% lower than last year’s surge. Yellow mustard bids are now the highest of the three classes and even with lower yields, we’re forecasting only a modest 9% decline in seeded area at 225,000 acres. Again, that’s in line with recent averages. We’re also forecasting oriental mustard acreage will continue to slip, down by 26% at 60,000 acres.
  • On January 11, the USDA is expected to release its Crop Production Annual Summary which would include its estimate of 2018 mustard yields. We would expect a sizable improvement in yields from the poor 2017 performance. This will likely push the 2018 US mustard crop well above 70 mln pounds (32,000 tonnes), versus 60 mln pounds in 2017.
  • In addition to improved yields, it’s also likely the USDA’s seeded area total could be boosted to 95,000 acres, up from its June estimate. The USDA’s Farm Service Agency acreage declarations are showing this higher total, which includes an increase in brown mustard plantings. The larger US crop is another reason for quieter demand for Canadian mustard in 2018/19.
  • Export data for October from Russia and Ukraine confirms ideas of a much larger surge in volumes than in previous years. Germany and Poland are Russia’s largest customers but exports are also moving to Asia, including China, Bangladesh and Pakistan. Kazakhstan export data for October isn’t available yet but we would expect its volumes would follow the same pattern as in 2017/18, adding to the Black Sea total. These increased Black Sea exports are a key reason behind the quieter Canadian export program so far in 2018/19, and that’s unlikely to turn around, at least in the short-term.

Outlook

Mustard supplies in western Canada are comfortable for all three classes, with a little less of a cushion for yellow mustard than the other two classes. As mentioned previously, the larger issue for the mustard market is the weak export demand which is unlikely to improve much for the remainder of 2018/19. As a result, the most likely outlook is a flat price environment with reluctant farmer selling providing the main “support”.