Flaxseed acres in Western Canada will see a further drop from the already record-low levels seeded in 2011 if new-crop prices don’t see considerable improvement by spring seeding time, according to market analyst Larry Weber.
Weber, of Weber Commodities in Saskatoon, made his statement in a presentation Monday to SaskFlax during the annual Crop Week conferences in that city.
Western Canadian farmers, primarily in southeastern Saskatchewan, seeded 694,000 acres of flax in 2011, well below the 10-year average and the lowest in recent history.
While a smaller crop would often lead to higher prices, that is not the case this year and Weber predicted acres won’t top 500,000 in 2012 if the bids don’t start improving.
At current new-crop prices, with flax at about $11 per bushel and canola at $12 per bushel, Weber estimated a farmer would be losing about $136 per acre if he or she seeded flax over canola.
As a result, he said, flax bids would need to rise by $2-$3 per bushel to bring in more area.
If the acres and forward contracting prices do remain small, the weather over the growing season will be important in determining the direction the flax market takes going forward.
Weber said forecasts were pointing toward excessive dryness in the key flax-growing regions, which could cause prices to rise if the dryness persists and there are problems with the crop.
With Canadian flax sales to Europe still hampered by lingering issues with genetically modified Triffid in Canada’s crop, Weber said the development of a domestic crushing industry would do much to boost the market for flaxseed.
Current crush margins were looking very profitable for flaxseed processors, he said, and estimated that southeastern Saskatchewan could see crush capacity expand by 150,000 to 250,000 tonnes.
"We can’t continue to export our raw product and let someone else get our margins," he said, noting China in particular has been buying Canadian flaxseed in recent years to crush and then sell the products into Europe.
While a question from the floor was raised on the profitability of selling flax meal in North America, Weber said the increased demand for omega-6 eggs meant that "we could be selling to every chicken barn in the country," if efforts were made to promote the product.