October 25, 2019

Market Developments

  • The latest crop report from Sask Ag showed no progress in the 2019 mustard harvest compared to the previous week, at 58% complete, although that may be a data error. Even if there were some advances, they would have been modest and the harvest is still trailing previous years badly. This includes the benchmark poor year of 2010 which had advanced to 91% at this time of year. Crop quality will have deteriorated further, leading to limited supplies of 1Can mustard.
  • One of the more puzzling items in last week’s Sask Ag crop report was an updated 2019 mustard yield estimate of 1,018 lb/acre, up from its previous estimate of 921 pounds and far above the StatsCan yield for the province at 844 lb/acre.
  • If true, this would be one of the higher end yields of the past number of years and would add nearly 40,000 tonnes to StatsCan’s earlier production estimate. That said, we’re somewhat skeptical that yields will be this high, even if all of the acres are somehow harvested.
  • Canadian mustard exports in August were solid at 8,500 tonnes, the strongest start since 2015/16 but still in line with average levels. Slightly larger volumes to the EU were the main reason for the small increase over last year. Our export forecast for 2019/20 is 120,000 tonnes, very much in line with the 5-year average and 10-year average levels. Of course, that will require an improvement in 2019 harvest progress.
  • It’s probably too early to tell, but the slower start to 2019/20 Russian mustard exports could be an indication of reduced crop potential. We’ve been monitoring conditions in key growing regions of Russia (and Kazakhstan) and it’s likely the 2019 crop is smaller, but it’s not clear yet by how much. In August, when Russian exports are normally ramping up sharply, 2019 exports were only 3,800 tonnes, the lowest in the past three years.
  • We’ll continue to watch export data for clues about the Russian crop size. Meanwhile, Kazakh mustard exports in August were 1,200 tonnes, up from year-ago levels of only 300 tonnes, but this would have been prior to the harvest in Kazakhstan.

Outlook

Mustard bids still haven’t shown any meaningful response to the harvest delays and quality concerns in western Canada. In large part, we expect this lack of price movement is related to the amount of uncertainty in the crop results. It also appears buyers have sufficient coverage for early 2019/20 but not enough for the full marketing year. That means bids will need to move higher in the coming months as more coverage is needed.