Flax acres could rise in 2014 if prices stay stable

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Despite a larger-than-expected crop, prices for flax in Western Canada continue to be stronger relative to other oilseeds — which observers say could mean another acreage increase in 2014.

“I think if anything, the numbers were a little bit higher (than expected), because the yield numbers were a little higher than was anticipated,” said Will Hill, president of the Flax Council of Canada, referring to Statistics Canada’s crop production report estimates for flax. “I think we got a good crop to work with.”

According to Statistics Canada, 2013-14 flax production is pegged at 712,300 tonnes, up from 488,900 in 2012-13. However, the bigger surprise is the 27.5 bushels per acre StatsCan is estimating. If that number holds up, it will be the highest yield ever recorded.

“I think if this price scenario continues, we will see an increase in acreage (next year),” Hill added, noting that he thinks Canada could support a two million- to 2.5 million-acre crop without developing demand problems.

As of Dec. 18, Prairie Ag Hotwire had FOB farm flax selling between $13.25 and $13.50 a bushel.

“Well, I would say it ended up being a very viable crop again, and I think that the potential for it to grow (in acreage) is very good,” said Richard Zacharias, general manager at Prairie Flax Products at Portage la Prairie, Man., adding that he sees prices continuing to remain in the $13.50 area going forward.

“Some of the other commodity crops like wheat and canola are starting to drop pretty erratically in their pricing, so I think flax will be a very good replacement (next year).”

Increased acreage could be seen in Alberta next year, Hill said, noting flax is a relatively low-risk crop.

“In Alberta, it’s a good alternative, because they don’t have the alternative of soybeans like we do in Manitoba, so I think there’s some potential there for acreage to grow,” he said.

“The other advantage of flax is that it has quite a bit lower input cost requirement, so it’s about anywhere from $100 to $200 an acre cheaper to plant. It’s a lower risk crop from that perspective, and a lot of farmers appreciate that.”

FarmLink Marketing Solutions, a grain marketing company in Winnipeg, estimated in an October report that the seeded area for flax will be 1.17 million acres in 2014-15, up from 1.025 million in 2013-14.

Expectations of increased acreage are due to continued strong export sales for Canadian flax, Hill said, adding that the EU, China and the U.S. are all major importers.

“The demand picture is pretty strong, and with the problems in Eastern Europe, I think we’re going to continue to see good demand for seed in Canada,” he said, noting a smaller U.S. crop this year means there really isn’t a competitive alternative for the Canadian crop. “We are shipping more to Europe, or as much as last year, so that’s positive.”

“Europe is back again into the game after they were out for a few years with that Triffid scare,” Zacharias said. “They’ve gotten over that, and are starting to show a little more demand.”

Looking ahead to 2014, Zacharias said he’s heard some rumours regarding new-crop pricing.

“Well, we’re hearing rumours that they could be in the $12 (per bushel) area,” he said. “It’s a good price for farmers.”

– Brandon Logan writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Related stories:
Flax sector slowly recovers from Day of the Triffids, Oct. 11, 2012
New Triffid-free flaxes in pipeline for 2014, Jan. 8, 2013