November 22, 2019

Market Developments

  • In its latest crop report (Oct 28), Sask Ag left its 2019 mustard yield estimate nearly unchanged at 1,024 lb/acre. Our own estimate is 950-960 lb/acre, roughly halfway between the Sask Ag number and the StatsCan September yield estimate of 844 lb/acre.
  • While the StatsCan yield would mean much tighter supplies in 2019/20, price behaviour is suggesting there aren’t serious concerns among buyers.
  • Canadian mustard exports were steady again in September at 8,500 tonnes, with almost no shift (compared to August) in destinations either. This brings the total for the first two months to 17,000 tonnes, up from last year’s 15,600 tonnes but still slightly below the 5-year average.
  • Seasonally, we would expect volumes to pick up in October or November, including a larger shipment to Europe. It’s still very early, and we’re not expecting any meaningful change from our 2019/20 export forecast of 120,000 tonnes, very close to average levels.
  • While Canadian mustard exports have been steady, Russia has been exporting smaller than usual volumes so far in 2019/20. Typically, this is the peak season for Russian exports but September volumes remained below 4,000 tonnes and year-to-date exports are only 10,600 tonnes compared to 18,400 tonnes last year. This is in spite of some observers’ suggestions that the Russian mustard crop set a new record in 2019. We’re still not certain of the impact of drought on the Russian crop, but it appears there have been some “glitches”.
  • Depending on how the chart is drawn, mustard bids appear to be gradually rising but not setting the world on fire. When we compare this year’s behaviour against seasonal tendencies, we can see that for the first half of 2019, yellow mustard bids have been nearly flat but have been edging higher since the end of July. While the increase during the Aug-Sep timeframe was only modest, it moved opposite to the seasonal tendency, which suggests concerns about a tighter supply situation. Since then, the average bid has turned higher, which fits with the seasonal tendency which improves until late November.
  • For brown mustard, bids are also moving slightly higher with the seasonal tendency which normally plateaus in the Dec-Mar period. Even oriental mustard is showing some modest strength but the seasonal peak for oriental normally doesn’t show up until late spring or early summer.

Outlook

Mustard bids are firming up as farmers become more reluctant sellers. Even though export demand is only routine and buyers don’t need a lot of coverage, farmers’ bullishness is enough to outweigh the needs. This type of cat-and-mouse game will likely remain a feature through the winter with stronger demand in spring adding another boost. Until then, short-term direction will likely turn sideways.