Prairie farmers seen seeding more flax

(Reuters) –– Canadian farmers will look to plant more flax this spring, but tight supplies in the meantime will slice exports to a five- or six-year low in the 2010-11 crop year, crop analysts said Monday.

Canada, the world’s leading grower and exporter of flax, saw production fall to an 18-year low of 423,000 tonnes in 2010 after excessive rain washed out millions of crop acres across the Prairies.

The oilseed is used in baked goods and industrial applications such as linoleum and exported by grain handlers such as Cargill and Viterra.

With current new-crop cash bids by grain handlers higher than average, farmers have lots of incentive to seed flax, whose profitability stacks up well even against grain and canola, said analyst Chuck Penner of LeftField Commodity Research in Winnipeg, in an interview prior to speaking at the annual Crop Production Week conference in Saskatoon.

“We’re at the high end (of prices) and it’s certainly attractive,” he said.

Farmers could seed 1.4 million acres — up about 50 per cent from last year — but that will depend on how much land is dry enough for seeding, Penner said.

“Flax tends to get planted later anyway, so a delayed seeding season won’t necessarily cause problems, but if it’s simply flooded, that will have an effect.”

Saturated soil conditions before winter and heavy snowfall in parts of the Prairies point to flooding and more than usual unplanted acres this spring.

Farmers could plant 1.5 to 1.6 million acres of flax this year, said Winnipeg oilseeds analyst Chris Beckman of Agriculture and Agri-Food Canada. The big year-over-year jump simply reflects a return to normal area and strong prices, he said.

Testing requirements for flaxseed may cap full planting potential, Penner said. Flax buyers and industry groups put tests in place after the European Union found genetically modified materials in flax shipments in 2009.

Exports for the current 2010-11 crop year will likely fall to a six-year low of about 500,000 tonnes, Penner said. AAFC’s Beckman pegs exports at a five-year low of 600,000 tonnes, with supplies running thin by mid-summer.

Canadian flaxseed exports grew to a 12-year high of about 772,000 tonnes in the 2009-10 crop year, due to big carryover supplies and exporters replacing lost sales to Europe with shipments to China and Japan. Year-to-date sales are ahead in 2010-11, but that’s because of a slow start a year ago.

“I don’t expect to see China in a big way because we’re at the price levels where they’re getting very hesitant to buy,” Penner said.

— Rod Nickel writes for Reuters from Winnipeg.

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