Aug 31: 494,000 MT of 2018 Canadian Flax Production

In its first flax production report for 2018, on Friday, August 31, Statistics Canada estimated this year’s Canadian flax crop at 493,700 MT. This is down 11% compared to the previous year and down 33% compared to the 5-year average.

In its first production report for 2018, on Friday, August 31, Statistics Canada estimated this year’s Canadian flax crop at 493,700 MT. This is down 11% compared to the previous year and down 33% compared to the 5-year average. Additionally, this figure is below the average pre-report guesstimates of 505,000 to 560,000 MT. Thus, this can be viewed as quite bullish for flax.

The projected decline in flax production is the result of seeded acres dropping by 15% or 155,000 acres to 982,200 acres (as reported in the June 2018 StatsCan acreage report). In contrast, flax yields have improved 9% year-over-year to 23 bushels per acre. However, this is still 7% below the 5-year average of 24.7 bushels per acre.

Statscan-Aug-2018-Flax-Production-Yields

There is a big question in this report that hasn’t been answered though: how has August’s Canadian weather impacted flax yields and production. We need to bear in mind that the StatsCan survey was conducted in July. Since then, the Canadian Prairies have been pretty dry and crops were under significant heat stress.

Therefore, we might expect to see the yield and production numbers in the September 19th data/model-based estimates of Canadian crop production come in a bit smaller than what we’re seeing here today.  Our gut says that these numbers might be 5-10% smaller than what the August report is showing.

The other thing to keep in mind is that the August production estimate from StatsCan for flax tends to be, on average, 7% below the final production number released in December. This usually amounts to 34,000 MT more than what is published in the August report.

While we take government estimates (especially those from StatsCan) with a grain of salt, this one might take a full shaker-worth since the August weather might be so impactful. .

To sum up, StatsCan Report Today was bullish for flax, and reiterates our position that with a smaller crop, carryout will be at its lowest in a long time, and thus, will support higher flax prices.

The next report we’ll be looking to is Wednesday, September 19th, when StatsCan will put out a satellite/data-modelled projection. This report tends to be a bit closer to the final numbers, given it’s done at a later stage in the crop’s development.

H/T: Statistics Canada
About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, 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.