May 24, 2019

Market Developments

  • Until this year, StatsCan hadn’t reported stocks data for mustard since 2013. As a result, it’s difficult to compare this year’s March 31 stocks of 125,000 tonnes against recent history. During the last five-year period available, March 31 stocks averaged 135,000 tonnes, so the 2019 stocks can be seen as a slightly tighter supply situation.
  • A number of things have changed in the global mustard market since 2013, but Canadian export volumes have remained more-or-less steady over the past 10 years, meaning supply requirements are still similar.
  • Canadian mustard exports have continued to outperform our earlier expectations, hitting 12,000 tonnes in March, the fourth straight month of above-average volumes. The year-to-date pace of 81,600 tonnes is ahead of last year at 75,400 and the 5-year average of 80,900 tonnes. Volumes to the US, Europe and some smaller destinations are all higher, indicating that this strong performance is broad-based, rather than relying on a single destination. It’s also worth noting that the seasonal high point for exports isn’t yet included in this total.
  • Because of this strong export performance, we’ve bumped up our full-year forecast to 120,000 tonnes, ahead of last year’s 112,000 tonnes and back in line with recent highs.
  • As of May 6, Saskatchewan farmers had planted 20% of expected mustard area. This compares to the 5-year average of 24%.
  • Typically, European mustard imports tend to rise sharply around September but the surge in volumes only lasts 3-4 months. So far in 2018/19, there’s been less of a drop-off in imports, with solid volumes continuing in the Jan-Feb timeframe. So far (Jul-Feb) in the 2018/19 marketing year, the EU has imported 72,200 tonnes compared to 65,100 tonnes during the same months of 2017/18 and 58,800 tonnes in 2016/17. One of the large reasons for the larger amounts from outside the EU has been a decline in intra-EU trade. Canadian market share has slipped to 32% so far in 2018/19 from 36% in 2017/18.
  • The seasonal patterns for mustard bids show that there could be a small bump in pricing ahead. That’s especially the case for yellow mustard which, because of relatively tighter supplies, has been outperforming brown and oriental. Even though the seasonal trend shows a slight increase for oriental mustard, the more-than-adequate supplies suggest a bounce will be unlikely. Meanwhile, brown mustard bids normally soften throughout the summer and will have a hard time showing any strength until after harvest.

Outlook

Mustard markets are flat right now, although decent volumes are still moving. The fact that solid export shipments have been filled without bidding up the market indicates supplies are still comfortable, whether reported to StatsCan or not. The most likely outlook for 2019/20 is that acreage will be large enough (with average yields) to maintain adequate supplies again and prices will remain within a few cents of current levels. A bit more of a recovery is possible for brown and oriental, with acres down.