Attractive flax prices may hike acres
There’s nothing like good old-crop prices to bring in more new crop acreage.
Flax might be a beneficiary of that situation this year, analysts say.
Recent prices of $17 per bushel caught a lot of farmers’ attention, just as prices for big acreage crops such as wheat were falling. The rally was sparked by demand from several buyers.
It happened as farmers were heading into their fields to seed, so they still had a chance to play with their acreage decisions.
“Prices have been pretty good, so for guys who are looking for alternatives in their rotation, it could fit,” said Jon Driedger of FarmLink Marketing Solutions.
“Around the margins, probably a few guys put in some more flax that they had been thinking of putting into other crops.”
Old crop bids had settled back and were harder to find by May 15, but the high-price message had already been received by many growers.
New crop bids of about $14 per bu. also haven’t discouraged acreage.
“If you can get the yield, that’s not a bad price,” said Driedger.
Flax has staged a significant recovery since the Triffid crisis, when tiny amounts of the genetically modified variety were found in conventional flax. Canada suddenly lost most of the European market, which was the main customer of prairie flax.
Acreage shrank and few thought the crop would find much replacement demand or alternate markets.
But then China started buying considerable amounts of flax, filling in the void left by the Europeans.
Shipments to Europe began again, with marketers finding a way to reach dairy and linoleum markets without running afoul of European GMO rules. As well, prairie farmers benefited from the dryness in Russia and Kazakhstan last year, which robbed Europe of its main flax source.
Europeans found themselves once more buying Canadian flax, this time competing with China for the oilseed.
It was that competition for flax from all directions that helped drive prices so high, analysts say.
“We’ve got solid business going to the (United) States, solid movement to China, and the extra little piece is Europe and it looks like there might be one more shipment this (crop) year,” said Chuck Penner of LeftField Commodity Research.
European demand could become an even more bullish factor if the former Soviet Union continues to struggle with dryness.
“It’s all depending on what happens with Russia and Kazakhstan,” said Penner.
via The Western Producer http://feedproxy.google.com/~r/westernproducer/~3/R3eThvJlRsk/