Prairie flax prices seen moving lower, long-term

Prairie flax prices are expected to move lower in the long term, a western Canadian market trader said.

"It looks like prices are probably going to be heading downwards before they head upwards," he said.

If Europe becomes more interested in buying Canadian flax, prices could rise, but that probably won’t happen anytime soon, the trader said.

"Nothing will happen there (in Europe) until breakup in the ports out east, but even if that does happen there are still GMO issues and the fact that Europe doesn’t have any money," he said.

The trader noted prices could also strengthen in the spring if for some reason a lot of flax acres in Western Canada don’t get seeded, but he doesn’t think that will happen either.

Shorter-term, prices should stay steady, as they will continue to be underpinned by the fairly tight supply situation and strong canola prices.

As of Wednesday, western Canadian flax cash prices delivered to the elevator ranged from $13.50 to $14.50 per bushel, according to data from Prairie Ag Hotwire. This compares to month-ago prices of $13.50 to $15 per bushel.

Farmers have been generally reluctant to sell, which has also provided support for prices, the trader said.

"When producers have heard the same price in the $14 range for the past few months, that doesn’t do much to foster trade," he said.

Flax prices have managed to stay strong, despite a lack of export business being made to Europe due to strict GMO restrictions, the trader said.

"We’ve maintained a solid price by picking up sales into the U.S. and into China," he said.

— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Related stories:
Prairie flax processor to rebuild, in South Dakota, Nov. 29, 2012
Flax sector slowly recovers from Day of the Triffids, Oct. 11, 2012

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