July 19, 2019

Market Developments

  • The StatsCan 2019 seeded area estimate for mustard came in just under 400,000 acres, a 21% decline from last year. This was a bit of a surprise, as we had been hearing some anecdotal reports that mustard area could actually be up from the StatsCan April intentions estimate of 416,000 tonnes, although still lower than 2019 area of 504,000 acres. Of course, there’s also the possibility that mustard plantings may have been underreported to StatsCan.
  • The breakdown by type was more surprising, as it showed the smallest decline (13%) for brown mustard area with yellow mustard area dropping by 24% to 190,000 acres. While yellow mustard yields less than other classes, we thought the sizable premium for both old-crop and new-crop bids would keep more acres in yellow mustard. While some “statistical slippage” is possible because of the smaller survey sample, this larger shift away from yellow mustard would be friendlier for that portion of the market while brown bids could remain under pressure.
  • Canadian mustard exports in May were 10,700 tonnes, up slightly from the previous month but below the 5-year average again. Volumes to the EU improved somewhat, although this year’s seasonal bump was a little smaller than usual and exports to the US were also below average for the month of May. Even so, year-to-date exports are at 102,000 tonnes, compared to 97,000 last year and the 5-year average of 104,000 tonnes. As a result, we’re comfortable leaving our full-year forecast at 120,000 tonnes, which still seems quite doable.
  • The Saskatchewan mustard crop is showing signs of improvement, although that’s still just relative to the dismal conditions to start the season. As of July 1, only 24% of the crop was rated good or excellent. This is actually in line with 2015 when the crop suffered from dry conditions but improved due to heavy rains in late June and early July. That year, the Canadian mustard crop ended up yielding a somewhat respectable 830 lb/acre, actually better than 2017 and 2018 when conditions deteriorated later in the season.
  • We should also note though that in Alberta, the condition of the mustard crop is also quite poor at only 30% good/exc versus the 10-year average of 70%. This poor rating in Alberta could provide additional drag on 2019 prairie-wide yields. For now, we’re keeping our yield forecast at 818 lb/acre, 5% below average. That’s just slightly lower than 2015 but a bit better than 2017 and 2018. This would mean a 2019 mustard crop of 145,000 tonnes, 30,000 tonnes (17%) less than 2018.
  • The USDA issued its first estimate of 2019 US mustard plantings at 110,000 acres, up 7% from last year and a new record. We had been expecting a small decline but this is still within a few thousand acres of our idea. If the yield ends up close to the 5-year average, it would mean a 2019 crop of 82 mln pounds or 37,000 tonnes, still lower than the record of 44,000 tonnes in 2016.

Outlook

The improving condition of the Canadian mustard crop has kept bids from responding but the crop still isn’t out of the woods yet. Tighter supplies are ahead, especially if farmers become more bullish and decide to hold back their selling. The largest unknown seems to be the surprisingly large drop in yellow mustard acreage and if that is the reality, that portion of the market has the largest upside potential in 2019/20.