March 15, 2019

Market Developments

  • Typically, we conduct our gross margin analysis and acreage forecasts twice in the crop planning season – once in December and again later in the decision cycle in March. That’s because changes in price signals and other conditions often affect the outlook. Some shifts aren’t directly related to prices but could still influence farmers’ decisions.
  • Both old-crop and new-crop bids for yellow mustard have risen significantly since December. We don’t analyze gross margins for other mustard classes but bids for brown have remained mostly steady and oriental has slipped further.
  • When we conducted our December analysis, mustard bids had been looking quite lacklustre. Since then, yellow mustard bids have shown some improvement while brown has been steady and oriental prices have weakened further. As a result, we’ve moderated our forecast for a drop in 2019 acreage, with seeded area shifting among the various types.
  • The improvement in yellow mustard bids has caused us to bump up our forecast of 2019 seeded area to 425,000 acres. That’s still roughly 80,000 acres or 16% less than last year’s levels. We would expect more of a shift toward yellow mustard and out of brown and oriental.
  • If yields improve to the 5-year average, the 2019 mustard crop would only decline by 10-15,000 tonnes from a year ago. And with slightly higher old-crop carryover, 2019/20 supplies would be nearly on par with the current marketing year.
  • The roughly steady supply situation would allow a similar export program of 115,000 tonnes again in 2019/20, although increased competition from the Black Sea region could limit export demand.

Outlook

The outlook for both supplies and usage in 2019/20 doesn’t look all that different from 2018/19, although the mix of classes will change. Overall though, ending stocks for 2019/20 aren’t expected to change all that much from the past 2-3 years, leaving a flat price outlook.