March 1, 2019

Market Developments

  • In its Annual Production Summary, the USDA estimated the 2018/19 mustard crop at 73 mln pounds or 33,100 tonnes. The USDA estimated seeded area at 103,000 acres, nearly identical to the previous two years with yield changes causing the large difference in production.
  • Mustard yields in the US for 2018 were estimated at 750 lb/acre, showing a recovery from the poor results in 2017, but were still below the 5-year average of 812 lb/acre. This larger 2018 crop should translate into lower import needs for the US down the road, although that hasn’t been the case in the first few months of 2018/19.
  • Kazakhstan is emerging as a more significant exporter of mustard, with a strong start to the 2018/19 marketing year. While the chart shows a sharp increase this year, the total volumes are still relatively modest, although the 5,600 tonnes in December topped Russian volumes for the month.
  • So far, the large majority of the increased Kazakh mustard export volumes have been moving to Mongolia. Total mustard exports from Black Sea origins declined to 10,600 tonnes in December from 13,400 tonnes in November but were slightly larger than December 2017 at 9,000 tonnes.
  • Even though mustard supplies in the Black Sea region are large, prices (at least in Ukraine) have been edging higher ever since the 2018 harvest. Since August, prices for white (yellow) mustard have gained US$100 per tonne while yellow (oriental) mustard is up US$70 per tonne.
  • We don’t have access to prices in Russia or Kazakhstan but would expect the gains there would be more moderate as that’s where the largest production increases have occurred. Even so, it’s a sign that there’s some strength in the Black Sea mustard market.
  • There’s been little movement in mustard bids for a number of weeks as patient farmer selling is running up against mediocre export demand. In theory, supplies are sufficient to match export needs for now, but some of this mustard isn’t available as some farmers’ target prices are above the market.

Outlook

The shift from contracted supplies to uncontracted mustard should provide a bit of strength later in 2018/19 but shortages aren’t expected to develop, meaning the gains will be modest. If 2019 seeded acreage remains steady as some are expecting, the new-crop market could see some downside, while a drop in seeded area as we’ve forecast should be supportive.