Western Canadian flaxseed cash bids have advanced in the past month, with fresh export demand along with tight supply concerns contributing to the firmness, said an industry participant.
"The Chinese market has really helped out western Canadian flax prices this year," said Chuck Penner, an analyst with LeftField Commodity Research in Winnipeg.
The Chinese and U.S. interest in Canadian flax has provided a bullish flavour to the cash market recently, he said.
Tightening global supply, thanks to a smaller than expected crop in Kazakhstan, along with smaller Russian flax exports, also has added to the upward price potential, he said. Penner noted that these factors are pushing prices for eastern European flaxseed up, while making it more attractive for buyers to look at western Canadian flaxseed.
Currently, flaxseed spot bids go for as much as $12.64 per bushel in Alberta, $13 per bushel in Manitoba and $13.25 in Saskatchewan, according to data from Prairie Ag Hotwire. That is up anywhere from six cents to 50 cents per bushel, compared to one month ago.
In the near term, Penner sees western Canadian flaxseed cash bids remaining steady to improving slightly. Continued demand from China and the U.S., along with thin supplies, will be supportive.
The firm cash bids for new-crop flax, meanwhile, have garnered the attention of western Canadian farmers, Penner said. With the current price for new-crop bids ranging between $12 and $12.50, farmers will get a good return for their money, he said, adding that the higher input costs for canola makes flaxseed a less risky investment for farmers.
Farmers are expected to seed close to a million acres of flax this spring, compared to 694,000 acres last year, Penner said.
The increase in seeded area will reflect the reclaiming of lost acres due to wet conditions in southeastern Saskatchewan and Manitoba, as well as the stronger price outlook, he said.