January 25, 2019

Market Developments

  • Mustard exports in November followed the seasonal pattern of larger volumes ahead of the Seaway closure, with 11,200 tonnes moved out. The last two months of solid volumes have eased some of the earlier concerns about poor export demand. The year-to-date total is now 39,000 tonnes, slightly ahead of last year’s 38,100 tonnes but still below the 5-year average of 41,900 tonnes.
  • As a result, we’re more confident that our full-year forecast of 115,000 tonnes is achievable. If that’s the case, it would mean 2018/19 ending stocks would remain in the 65-70,000 tonne ballpark, fairly steady with the previous two years. That said, mustard is one of those crops where some production has been underreported.
  • Earlier reports indicated that mustard plantings in Kazakhstan increased by 250% in 2018, hitting 78,300 ha (193,000 acres). Based on assumptions for harvested area and the 5-year average yield, this would put 2018 production at 32,000 tonnes. While this still isn’t a huge crop, we note that production of other special crops has been ramping up in Kazakhstan, which means this may not be a one-year anomaly.
  • In November, total mustard exports by Russia and Ukraine were 9,700 tonnes, down from the previous two months but still stronger than the previous few years. In addition to western Europe, exports are also moving to Asian countries such as Bangladesh, Pakistan, Mongolia and India, which compete in the oriental portion of the mustard market. We’re still waiting to get export data from Kazakhstan but that would simply add to the record Black Sea pace so far in 2018/19. While volumes will continue to seasonally decline, larger-than-average supplies will still be available.
  • New-crop bids are starting to show up, with indications last week at the Crop Production Show in Saskatoon coming in at 33 cents for yellow, 30 cents for brown and 26-28 cents for oriental mustard, stronger than spot bids.

Outlook

It appears the 2018/19 mustard market may have found its lows, with Canadian bids edging higher, although some of that strength is loonie related. The last small bump in bids isn’t necessarily a reflection of low supplies, but rather lack of farmer selling and modest export business. The oriental portion of the market will remain under pressure due to Black Sea mustard moving into Asia while yellow and brown likely has a bit more upside going into the spring months.