August 30, 2019

Market Developments

  • In its initial yield and production estimates for 2019, StatsCan included a fairly aggressive mustard yield of 886 lb/acre, slightly above average and the highest since 2016. This resulted in a 2019 crop of 156,000 tonnes, 18,000 (10%) less than 2018.
  • Even so, the larger yield isn’t enough to offset the 2019 acreage reduction and the smaller crop will mean lower supplies in 2019/20. Even with a modest export program, ending stocks could tighten up a little further.
  • This week’s StatsCan report didn’t include a breakdown by type but if the June acreage estimates are any indication, supplies of yellow mustard in 2019/20 will be on the low side while brown mustard supplies will be comfortable. This is already being reflected in Canadian bids.
  • In mid-August, the USDA’s FSA initial acreage data was released, which showed that seeded area of brown and oriental mustard is up in 2019 while yellow mustard acres will be lower. Keep in mind, subsequent FSA data releases will include some late submissions, which will bump up the acreage totals a bit more.
  • As of August 1, FSA seeded area was pegged at 90,700 acres compared to the USDA’s NASS June estimate of 110,000 acres, and that 19,000 acre difference is unlikely to be made up. This means it’s possible final seeded area will end up below the NASS total. Still, the data reflect the recent trend toward larger production of brown and oriental mustard in the US while yellow mustard area is shrinking.
  • With the Montana mustard harvest 13% complete as of August 25, conditions have strongly improved in the final few weeks of the growing season. The latest crop ratings showed 63% of the mustard good or excellent, up from 55% the previous week and well off the early August low of 39% good/exc. As a result, we would expect above-average US yields in 2019.

Outlook

As the Canadian mustard harvest gets underway, mustard bids have remained mostly steady. This lack of seasonal weakness suggests the 2019/20 supply outlook isn’t heavy and could be a clue that prices will firm up following harvest. Yellow mustard bids are still showing a sizable premium and the production outlook for that class is pointing to the possibility of even stronger price performance than the other classes in 2019/20.