In the FarmLead 2017 grain markets forecast, we mentioned that global flax supplies weren’t huge. However, we also expected prices to stay below $14 CAD/bushel.
And they have.
When we started 2017, the flax market was starting to trend a bit higher thanks to some fresh international demand, mainly because of China. Through January and parts of February, we saw a lot of trading activity in the FarmLead Marketplace above $13 CAD/bushel.
After that, the market started to pull back as we started to recognize that 2016/17 Canadian flax exports wouldn’t match those of 2015/16.
Ag Canada suggests that 2016/17 Canadian flax exports ended up at 500,000 tonnes. That was more than a 21% decline from the previous year.
As such, we entered the 2017/18 marketing year with 190,000 tonnes still in the Canadian pipeline. For perspective, Canadian ending stocks were always below 100,000 tonnes when we saw prices in the $14, $15, and $16 CAD/bushel range a few years ago.
Currently, the Canadian Farm Ministry is estimating 180,000 tonnes left over by the end of the 2017/18 marketing year.
However, in early 2017, new crop flax prices for the 2017/18 crop were swaying between $11.50 and $12 CAD/bushel. As such, more acres were bought.
More Canadian Flax Acres But Smaller Markets
Canadian farmers ended up seeing a little over 1 million acres of flax in the spring of 2017.
Thanks to some less-than-ideal growing conditions though, yield fell and, thus, so did production.
More specifically, average flax yields across Western Canada were a touch under 21 bushels per acre.
That’s 13% below the five-year average and 27% below 2016’s yields.
Thus, a crop of just 548,000 tonnes was taken off this fall. That’s 7% below last year’s harvest and 24% below the five-year average (Although, we should note the anomaly of nearly 1 million tonnes harvested in the 2015/16 crop year)
However, flax has become an increasingly large battleground for international competition. The growth of acres and production in the Black Sea isn’t helping flax prices in North America.
Right now, Canadian flax exports are sitting at 122,000 tonnes, or about 4.5% ahead of last year’s pace.
Further, Ag Canada is only expecting to see about 68,000 tonnes of domestic flax demand in Canada in 2017/18. That’s down significantly (65% to be exact) from last year’s 191,000 tonnes used in the Great White North.
It’s also 50% below the five-year average.
Thus, we’re cognizant of the international and domestic demand constraints (and correspondingly, taking advantage of pops in the market as they become available).
What Now for Flax Prices in 2018?
With more information flying at farmers than ever, it’s difficult to get all of your insight in one place to help you make actionable decisions on your grain. That’s why FarmLead introduced GrainCents, a subscription service dedicated to telling farmers when to buy and hold their flax.
Also, we provide regular price analysis and a deep-dive into the major (and minor) factors impacting your crop every day. In GrainCents right now, there are 4 different factors that we have identified as either bullish or bearish for flax prices.
With this insight, we help you identify windows to get the best price possible for your crop. We also identify in GrainCents what percentage you should be sold on your 2017/18 old crop flax, as well as where your sales should be on your 2018/19 flax crop.
And next week, we’re giving our GrainCents flax subscribers a special report that is worthttps://farmlead.com/graincents/?crop=peash more than an annual subscription to the service on its own.
We’re unveiling our 2018 flax forecast exclusively to our GrainCents readers.
Inside this report, we’re going to discuss the critical factors that will affect your flax crop in 2018. More importantly, we’re going to begin to set our schedule for potential selling opportunities so that we can capture the best price possible in the year ahead.