September 27, 2019

Market Developments

  • As of September 16, only 24% of the Saskatchewan mustard crop had been harvested. That’s fallen further behind even the previous poor years of 2014 and 2016 and is even slower than the previous “record” in 2010.
  • In its model-based production report earlier this month, StatsCan trimmed its 2019 yield to 800 lb/acre and its production estimate to 141,000 tonnes. That’s 33,000 tonnes or 19% less than in 2018. As always, there will be further revisions and the final total may end up larger, assuming the entire crop is harvested. In a recent Sask Ag crop report, its yield estimate for mustard was 921 lb/acre, compared to StatsCan’s estimate for the province of 844 lb/acre.
  • Aside from the smaller crop, the larger concern may be the availability of 1Can mustard. If we apply the average mustard grades from 2010, 2014 in 2016, only 87,000 tonnes of mustard would be a 1Can and another 39,000 tonnes would be 2Can.
  • The USDA won’t likely release a 2019 mustard crop estimate until January, but it appears the seeded area total will need to be revised downward. Based on the latest acreage declarations from the Farm Service Agency, mustard area will likely end up around 92,000 acres versus the 110,000 reported by the USDA in June. This is also down 10,000 acres from last year’s total, with seeded area of yellow mustard down 8% while brown and oriental are both higher than 2018. Based on crop conditions in Montana, the 2019 crop could end up yielding close to the 5-year average, which would put production at 68.5 mln pounds or 31,000 tonnes. In Montana, 87% of mustard has now been harvested, slightly ahead of last year and the 5-year average pace.
  • Mustard exports from the Black Sea region picked up in July to 7,300 tonnes, the highest total since March. Typically, Black Sea mustard exports don’t start to rise until August and hit a peak in October, but this year’s hot dry conditions may have accelerated crop maturity and allowed for a sooner start, at least from Russia. The Kazakh harvest doesn’t start till later and its July exports would still be old-crop mustard.

Outlook

Despite the serious delays in Canada’s mustard harvest, bids have remained essentially unchanged for all three classes. Part of this lack of response could be related to buyers’ fairly solid coverage but if the delays continue, that situation will shift and more aggressive bidding will be needed to backfill existing contracts. At the same time, Canadian farmers will become more reluctant to sell and this will start to add more lift to the market, especially later in 2019/20.