Aug. 26: More Fake News in Flax – GrainCents Flax Weekly Digest

In this digest, we investigate some ‘fake news’ regarding flax exports in Kazakstan. Also, we check in on the flax harvest progress and current prices.

Current Sales Position:

We are 70% sold on 2017/18 old crop flax.

We are 20% sold on 2018/18 new crop flax.

Good morning,

Last week, Agriculture Canada released their monthly outlook for major grains, oilseeds, and specialty crops. While they didn’t make any changes to the flax balance sheet, it’s still a good exercise to review the numbers.

For full-year 2017/18, AgCanada expects flax exports to hit 450,000 MT, which would be a 10% decline compared to last year. However, based on our own analysis using StatsCan’s data, we think AgCanada’s latest estimate for total flax exports is understated.

More specifically, StatsCan reports that through June 2018, flax exports were already 454,400 MT, which is clearly higher than AgCanada’s full-year estimate.

If we add a projection for July 2018 exports (based on the 3-year average for the month), 2017/18 Canadian flax exports could come in at 495,000 MT. This would only be 1% lower compared to the previous year.

Flax Exports Canada, Cumulative

For 2018/19, AAFC said that flax acres seeded in Canada came in at a little more than 884,600, down 15% from 2017/18’s area. Despite the significantly lower acres, yields are forecasted by the AAFC to jump 16% year-over-year to 24.5 bushels per acre (the 5-year average is 24.3). Thus, higher yields will offset the smaller planted area, resulting in a harvest forecasted at 545,000 MT, down just 2% year-over-year.

However, given some of the dry crop conditions across Western Canada, we think this is less than likely. In fact, we think yields could end up very similar to last year at 21.2 bushels per acre. This would then equate to a Canadian flax harvest of something closer to 470,000 MT (keep this production number in mind).

Exports for 2018/19 are optimistically forecasted to rise 33% to 600,000 MT while domestic use is expected to fall sharply by 88% to just 20 MT.

This all adds up to AgCanada thinking that 2018/19 Canadian flax ending stocks will come in at a measly 85,000 MT, with a stocks-to-use ratio of 13%. This is a 50% drop year-over-year for both factors.

Flax Prices vs. Ending Stocks (Canada)

However, if smaller yields do materialize, and production is closer to that 470,000 MT we suggested, then that carryout number will be even lower.

Our math suggests that there is certainly a possibility of Canadian flax ending stocks come in below 50,000 MT, which would be the smallest level since 2004/05’s crop year of 24,000 MT.

From a price point, keep in mind that the 2012/13 crop year had a carryout of 71,000 MT, the last time we were selling flax with a $15, and in some cases, a $16 CAD per bushel handle in front of it.

Kazakhstan Exports Overstated?

APK Inform came out this week saying that Kazakhstan is set to export a record 450,00 MT of flax in 2018/19.

Based on our math, we think that this estimate is too high.

In fact, we think that the number could be about 50,000 MT lower, for a total of 400,000 MT.  Let’s explain.

According to Kazakhstan’s Ministry of Finance, flax exports through May 2018 are pegged at 335,522 MT, which is up nearly 30% year-over-year.

In the past 3-years, the average exports for June and July are 27,641 MT and 21,517 MT, respectively. If the agency is correct, 2017/18 exports would come in at 389,814 MT, an increase of almost 30% year-over-year and a new record.

If Kazakhstan will be able to export 450,000 MT in 2018/19, that would be another 15% increase year-over-year.

While this is certainly possible, we are skeptical that Kazakhstan will produce another bumper crop two years in a row, given the weather they’ve seen this growing season.

Kazakhstan Flax Exports

Canadian Flax Exports Start 2018/19 Strong

That being said, through Week 3, the Canadian Grain Commission says that 19,900 MT of Canadian flax has been exported thus far. This is up 54% year-over-year and 142% better than the 3-year average of 8,200 tonnes.

This is also 28% more compared to the same time last year and 78% better than the 3-year average for Week 3.

Flax Harvest Update

Last week, the USDA reported that 29% of the North Dakota flax crop was in the bin, 13 points ahead of the seasonal average. As only 18% of the crop was harvested at this time a year ago, the ND flax harvest is off to a fast start!

Conversely, next door in Montana, the USDA said last week that 23% of the flax crop is harvested. This is 41 points behind last year’s pace of 64% harvested, and behind the seasonal average of 39%.

Going into tomorrow’s USDA Crop Progress report, the average for North Dakota’s flax harvest is 29% complete, while the average for Montana flax harvest is 56% complete.

Flax producers in Saskatchewan have not yet begun combining, which is expected. For next week, on average 1% of the harvest is complete.

Like Saskatchewan, none of the flax crop has been combined in Alberta, but our guesstimate is that yields will come in below average this year. In the most recent provincial crop report, just 46% of the crop in the Wild Rose province is considered to be in Good-to-Excellent condition.

Flax Prices This Week

This week, cash flax prices delivered to Saskatchewan elevators are sitting at an average of about $12.15 CAD per bushel. This is slightly down week-over-week but still up nearly 7% compared to the same time last year.

Flax Prices Saskatchewan

Harvest pressures / seasonality is certainly in the mix right now but, with tighter supplies, we expect higher flax prices going into the 4th quarter of 2018. If yields come in below expectations (which we think is very likely), then prices could rise even more.

While we’re monitoring field reports very closely, Kazakhstan flax exports are likely overstated for 2018/19. Because of this factor, as well as the strong demand from China, we continue to be bullish on flax prices.

To growth,

Brennan Turner
President | CEO


306-715-4540 (cell)


FarmLead – North America’s Grain Marketplace




August 19– Flax Weekly GrainCents Digest

August 13– Flax Weekly GrainCents Digest

August 5– Flax Weekly GrainCents Digest

July 29– Flax Weekly GrainCents Digest

About the Author
Brennan Turner

Brennan Turner is the CEO of, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.