Western Canadian flaxseed cash bids continue to soften, as strong global supplies amplify the downward price trend, said industry participants.
A large eastern European crop has helped fuel the downward price trend recently, said Paul Martin of Prairie Flaxseed Products at Portage la Prairie, Man.
With eastern European flaxseed prices coming in around the equivalent of $9.75 a bushel, it’s made it more attractive for European consumers to buy it from the Black Sea area rather than Canada, Martin said.
Historically, two-thirds of western Canadian flaxseed exports have gone to Europe, said Mike Jubinville, an analyst with Pro Farmer Canada in Winnipeg. However, much of the export demand has been confined to North America now, he said.
Cash bids for flaxseed delivered to the elevator have fallen well below the $13 a bushel mark in various areas within Western Canada. According to data from Prairie Ag Hotwire, flaxseed values in Western Canada range from $12.44 a bushel in Alberta to $12.68 in Manitoba. Saskatchewan has the highest level, around $12.77 a bushel.
Bids have generally declined by about a dollar per bushel over the past couple of months, and are well off the crop-year highs above $15.
Export demand for western Canadian flaxseed will be limited for the rest of the year as the ample Ukrainian supply will limit the upward price potential in flaxseed, Jubinville said.
However, flaxseed values may nudge up slightly in February and March, with possible concerns of fewer acres being grown in Western Canada and some buyer interest in the March forward position providing support, he said.
The long-term picture for western Canadian flaxseed remains bearish heading into spring-time. Although it’s too early to tell how many acres of flax will be seeded, the dry winter weather could limit seeding in many areas across the Prairies, despite some areas of eastern Saskatchewan having some moisture in the ground, Martin said.
The weather problems may cause farmers to take flaxseed out of their rotations and instead seed other crops such as canola, he said.
With canola looking to be a better cropping option than flaxseed, and Ukraine becoming a major flaxseed player in the global market, it could also limit total acres, Jubinville said.
"I think flaxseed right now is kind of a dying commodity," he said.