MarketsFarm — While flax prices in Western Canada have fallen by at least half from what they were one year ago, they are still too high to be competitive on a global level, according to one flax processor.
Mike Popowich, owner and vice-president of TA Foods Ltd. at Yorkton, Sask., said demand for the crop grown in Western Canada is currently not as strong as for other commodities, despite flax’s recent status as a heart-healthy food.
“Demand is fairly weak. The price is still too high for competitive bidding in the export markets,” Popowich, a director for the Saskatchewan Trade and Export Partnership (STEP), explained. “There seems to be an excess on the market, which is weighing on prices and has been over the last couple of months.”
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As of Wednesday, the high-delivered bid for flax in Saskatchewan was $17.50 per bushel, down $1 from the start of 2023 and down $20.50 from one year ago, according to Prairie Ag Hotwire. In Manitoba, the high-delivered bid was $17.22/bu., down 65 cents from last month and $20.03 lower than at the same week last year. In Alberta, the high-delivered bid was $16.89, down 21 cents from Jan. 1 and $15.60 lower than on Feb. 1, 2022.
According to Agriculture and Agri-Food Canada (AAFC), Canada produced 346,000 tonnes of flaxseed in 2021-22 and is projected to grow 474,000 during the 2022-23 marketing year. For 2023-24, 500,000 tonnes are expected to be grown.
However, seeded area is expected to stay below one million acres and total domestic use is dropping to below 100,000 tonnes. As a result, carryout stocks are estimated to be 100,000 tonnes and above this year and next, putting more pressure on prices.
Adding to price pressures is more plentiful and cheaper flax from Russia and Kazakhstan.
“They have a lot of flaxseed available to market at fairly low pricing to major buyers like China and now it’s going to turn Canadian flax into a domestic or North American commodity. That’s going to decrease prices and lead to lower overall demand,” Popowich said.
He added that Russian-origin flax would not deter European buyers who would otherwise be hesitant due to the country’s invasion of Ukraine. Kazakhstan produced around 2.5 million tonnes of flax last year, according to Popowich.
“Kazakhstan is supplying a lot of the European market and right now a lot of Russian flax would be supplying the Chinese demand, so that has definitely hindered Canadian exports to the European Union and Chinese market in the last year,” Wayne Thompson, CEO of the Flax Council of Canada, said to Allan Dawson of Country Guide last month.
“For many years, Canadian flax had easier access to the Chinese market. In recent years both Russian and Kazakhstan flax was limited as to what could be imported into China, but over the last three or four years those quotas have been increased so Russia and Kazakhstan are able to export more flax than they used to into the Chinese market.”
Seeded flax area in Canada is projected to increase from 778,000 acres in 2022 to 865,000 in 2023. But Popowich believes canola may still take away acres from flax.
“(Flax prices) are still fairly high, but they may be not as attractive as they might be with other commodities being attractive in price,” he said. “We should see another decline in acreage, but it’s hard to tell until things start happening on the production contract side in the market.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
