April 26, 2019

Market Developments

  • StatsCan pegged mustard seeded area at 416,000 acres, down 17% from last year. This is below our latest forecast at 450,000 acres. With a recovery to the 5-year average yield, the 2019 crop would reach 158,000 tonnes, only 9% less than last year. With an average export program, ending stocks would remain relatively stable for 2019/20.
  • Within the overall acreage total, we’re expecting a shift out of oriental and brown mustard and into yellow. As part of the 2019 crop forecasts, it’s worth noting that yields the last two years were well below average. Even if seeded area is down in 2019, production could easily match or exceed the 2018 total. Based on a recovery to average yields, we’re currently forecasting a 20% increase in yellow mustard production while oriental and brown mustard production could be down 15-25% from a year ago.
  • According to Ag Canada and Environment Canada precipitation maps for the 2018/19 winter season, moisture in the key mustard area of southwest Saskatchewan and southeast Alberta was close to normal. The Canadian Drought Monitor map also shows the southern extremes of Saskatchewan and Alberta aren’t currently facing the same drought conditions that are more of a concern in central and eastern Saskatchewan. While it’s still early, this provides a more favourable outlook for the start of the growing season in the main mustard producing regions.
  • While Black Sea mustard exports are declining from the peak seen right after the 2018 harvest, volumes remain large for this time of year. There’s also a noticeable shift in origins, with Kazakhstan taking over from Ukraine as the second largest exporter in the region. While the EU is still the largest destination for Russian exports, Asia is a key market for both Russia and Kazakh mustard, which could explain why the oriental mustard market in western Canada has been so weak in 2018/19.
  • Prices for yellow mustard continue to remain steady but both brown and oriental are fading as heavier supplies are outweighing the mediocre export interest. New-crop bids are also slipping as ideas of increased mustard acreage are taking hold, suggesting supplies will remain heavy again in 2019/20.

Outlook

It appears mustard growers are more willing sellers than they are typically, adding more pressure to an already heavy market. That’s especially the case for brown and oriental mustard which are facing stronger competition from Black Sea origins. Meanwhile yellow is still supported by steadier demand from the US. Next week’s StatsCan acreage estimates could confirm a more-than-adequate 2019 acreage base which would keep pressure on prices in the coming marketing year, especially with strong export competition expected again in 2019/20.