May 10, 2019

Market Developments

  • It appears a shift of acres out of canola and into mustard hasn’t transpired, according to the StatsCan seeding intentions estimate. Seeded area for 2019 is forecast at 416,000 acres, down 17% from 2018. This is lower than our own forecast of 450,000 acres and well below other estimates. There is still some potential for a few more acres to end up in the mustard column, but that will likely be limited.
  • This drop in acreage could be partly offset if yields bounce back to the 5-year average but production would still end up lower than last year, allowing supplies to tighten up and be closer in line with 2017/18.
  • Within this lower-than-expected acreage total, we’re now forecasting yellow mustard to remain essentially unchanged from last year at 245,000 acres while brown is forecast at 120,000 (down 31%) and oriental mustard at 50,000 acres (down 38%).
  • Canadian mustard exports strengthened to 10,900 tonnes in February, in line with last year and slightly ahead of the 5-year average for the month. An increase at this time of year is typical, making this February increase in line with the seasonal pattern. The year-to-date pace of 69,500 tonnes is still ahead of last year at 65,900 tonnes but slightly trails the 5-year average pace at 70,500 tonnes.
  • In contrast to earlier expectations that mustard exports would struggle in 2018/19, it now appears we may need to bump up our full-year forecast to roughly 120,000 tonnes, compared to 2017/18 at 112,000 tonnes.
  • It appears the larger 2018 mustard crops in the Black Sea region haven’t weighed on prices, at least in Ukraine. Since the 2018 harvest, prices for white (yellow) mustard have gained US$120 (2,000 hryvnia) per tonne and yellow (oriental) is up US$100 per tonne. While Ukraine has become a smaller player in the regional mustard market, we expect there’s still some price influence from Russia and Kazakhstan.
  • Bids for all three classes of mustard levelled off in the last week or two but the trend for oriental and brown is still generally lower. Yellow mustard prices are faring a little better but are mostly flat.
  • New-crop bids slightly above old-crop levels suggest the outlook for oriental mustard is calling for slightly tighter oriental mustard supplies, although certainly not concerning. There doesn’t seem to be a strong push to get more brown mustard in the ground however, with new-crop bids now dipping below old-crop. And with new-crop yellow mustard in line with old-crop levels, buyers appear to be comfortable with 2019 acreage prospects.

Outlook

While the yellow portion of the 2018/19 mustard market has performed better than we expected, it’s still fairly sleepy. This tells us there’s a good balance between the decent export demand and farmers reluctance to sell. Supplies of brown and oriental mustard are relatively heavier and until now, farmers have been more willing to let to product go. While the overall 2019 acreage projection from StatsCan should cause supplies to tighten up and support bids, the breakdown by type is still fairly uncertain and could cause shifting between the various classes.