Strong global demand for Canada’s flax stabilizes prices

Western Canadian flax prices are seen to have stabilized post-harvest amid continued strong export demand from the U.S. and China, with a poor Black Sea-region crop likely leading to increased exports to Europe.

As of Thursday (Nov. 21), Prairie Ag Hotwire had FOB farm flax priced at C$13.25 to C$13.75 per bushel, up from C$12.50 to C$13.00 per bushel a month earlier.

“Given what’s happened with the other commodities that have been under some pressure since harvest, I think flax has been holding relatively well,” said Will Hill, president of the Flax Council of Canada. “We have good demand and we’ve had good yields.”

According to Agriculture and Agri-Food Canada’s Outlook for Principal Field Crops on Thursday, flax exports are pegged 575,000 tonnes, up from 481,000 in 2012-13.

The Black Sea region, which competes with Canada in the European marketplace, has a disappointing crop this year, meaning Canada is expected to export a fair share of flax to Europe this year, Hill said.

“I think (the Black Sea region) had some weather problems at harvest, so it looks like they won’t be as big of a factor as they were two years ago,” he said. “Their problems with harvest are going to allow us to do more European business.”

Europe used to be the biggest importer of Canadian flax, Hill said, noting that the goal is to once again be its dominant supplier.

“Traditionally, we used to export 65 per cent of our crop there, but now that’s changed because China has come on board,” he said. “But as we increase the acreage here, it’s always good to have another alternative buyer. Last year, I think we shipped almost 150,000 tonnes to Europe, up from 20,000 the year before.

“Certainly having that demand there is going to hold up prices, plus it also keeps us in that market.

“Obviously if there are weather problems there, it allows them to continue to look at us as an alternative supplier, so eventually we hope to get to the point where we’re the dominant supplier (to Europe) again.”

Looking ahead, Hill said he sees the market staying relatively strong.

“I see good demand and there’s nothing on the horizon that I’ve seen that’s going to change the quantity of exports we’re going to send to the U.S. and China,” he said. “I think the big concern in everyone’s mind is where would the Black Sea region be and where would European demand be. I think that’s going to be as strong as, or stronger than last year.

“With that all being said and expectations of a low carryout, we’ve got a good balance of supply and demand, and I think that’s what the market is showing us.”

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

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