After struggling for quite some time, flaxseed values in Western Canada have slowly started to strengthen and there are ideas the uptrend should continue in the near future.
"Tight global supplies have certainly helped the strengthening of flax bids," said Mike Jubinville of ProFarmer Canada in Winnipeg. The fact flax supplies in Western Canada are also tight has also been supportive to the cash sector.
Some of the tightening of global flax supply was associated with ideas of dryness and winterkill potentially affecting flaxseed crops from former Soviet Union countries, Jubinville said.
Meanwhile, Canadian flaxseed supply remains short. Extremely wet conditions last spring, along with a very hot dry summer across Manitoba and Saskatchewan, brought lower than anticipated high quality yields.
Jubinville said the lack of near-term supply is limiting exports of western Canadian flaxseed. Most of the exports of western Canadian flaxseed are currently within North America, he said.
While smaller near-term supply is keeping values firm, the continuing upward trend in outside commodities, including canola, is also providing support for flaxseed values, Jubinville said.
Currently, flaxseed spot bids go for as much as $13.17 per bushel in Alberta, $13.46 in Saskatchewan and $13.61 in Manitoba, according to Prairie Ag Hotwire data. That’s down eight cents in Alberta, compared to one month ago, while up 21 cents in Saskatchewan and 61 cents in Manitoba from a month earlier.
Jubinville said there is very limited downside potential seen in new-crop flaxseed bids.
The limited downside in new-crop values is associated with tight old-crop inventory, he said, along with the potential for supplies to remain tight in the new crop year.
"Flaxseed is a well supported market," he said.
Farmers are expected to plant near a million acres of flaxseed across Western Canada this spring, Jubinville said. That compares to last year’s level of approximately 694,000 acres seeded, according to Agriculture and Agri-Food Canada.
The increase in seeded area will reflect lost acreage due to wet conditions last spring in Manitoba and Saskatchewan, he said.
However, the lower flaxseed yield potential may make it less attractive to some customers to grow further seeded area, said Paul Martin of Prairie Flax Products at Portage la Prairie, Man.
Some customers have switched over from flaxseed to canola because of canola’s higher yield potential, Martin said.
New-crop bid prices are between $12.40 per bushel and $13 in Saskatchewan, and $13 to $13.25 in Manitoba, according to Prairie Ag Hotwire data.