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2017 Crop Reports

July 12, 2017

All mustard crops throughout the mustard growing area of Alberta, Saskatchewan, North Dakota and Montana have been stressed this year from the lack of rain received since seeding. Alberta mustard crops have fared the best on average by receiving 2-3 inches since late April, and Montana/Western ND/parts of Southwestern SK  did the worst by receiving virtually nothing. Other areas in Saskatchewan and North Dakota have fared about the same as Alberta. In addition to the lack of rain that is 50 % of normal at best – and not much more is forecast – has been the extreme heat in almost all areas over the past two weeks. The forecast is for more extreme heat (+30C for many days and +35C for a few) over the next two weeks. Earlier seeded mustard that received a more gentle rain after seeding is holding up the best and the worst crops are those that did not germinate evenly due to the lack of much needed germinating moisture in the soil at seeding. 

The next few weeks will tap the sub-soil reserves and mustard plants, with their deep roots suited for dry warmer years, will do what they can to survive either by letting flowers fall or not fully filling the pods that form after flowering. Overall where moisture has been received the mustard is holding up very well especially when compared to canola that is considered more of a cool season crop. 

Virtually all of the 2016 mustard crop contracted by Old Products has now been picked up and delivered to our cleaning/storage facility in Drayton. Our inventory levels are high again for yellow mustard which we expected them to be after the above average yields in 2016. Our brown mustard requirements, however, will rely on the 2017 production soon after harvest due to lower carryforward stocks caused by heating of two key growers’ storage bins. I plan to send out harvest sample bags in the next few weeks and will begin my crop touring/inspections in the same time period. Next week, together with Bill and Augie from the head office, we will visit a few farms near Calgary, Alberta before seeing some organic production in the Saskatoon area. We will also take in the crop tour planned by SMDC at the Ag Canada farm in Saskatoon next Tuesday.  

At this time spot yellow prices have changed little due to the resilience of the 2017 mustard crop and the significant reserves from 2016 in both Canada and the USA.  Brown mustard prices, on the other hand, are showing more firmness due to the lack of carryforward stocks from 2016. 

Please let me know if you have any questions or comments.

Thanks,

Walter

May 30, 2017

Mustard planting has been in full motion the past two weeks and now virtually done except for an area in central SK and southern MB where Olds Products has some organic grower contracts. Mustard has had good emergence from planting. Most areas could use some rain in the next few weeks to aid the growth, but most areas report good subsoil moisture and overall good conditions. I did receive a phone call on the weekend from a grower who was spraying for flea beetles in Govan, SK region of Saskatchewan.

Contracted acres for Olds Products are only slightly lower in 2017 after a very strong average yield in Canada for 2016 that provided a much needed replenishment of our raw yellow mustard inventory. We have secured virtually all the 2016 production from our contracted growers and the plan is to now have it all picked up by the end of June or early July. A few Olds Products growers are holding a portion of the production that was not contracted. For the time being they will wait. 

At least half the 2016 total mustard acres in Canada and the USA were grown without a contract, which is normal for Saskatchewan. Given the surge in 2016 mustard production it is not surprising that spot mustard prices have retreated. A year ago at this time the market was starting to realize the potential after planting seed stocks were sold out everywhere and spot prices that were near record highs started to retreat in a big way. This rapid retreat is normal for spot mustard prices after historic highs.  Now that spot prices are at levels that are not sustainable for long term production, 2017 acres have backed off in a big way and we are back to a level in Canada and the USA that in an average year will just meet our domestic export requirements. The issue for the market will be the formidable yellow mustard stocks remaining from 2016 on farms in both Canada and the USA that will either take the spot price lower if 2017 production continues on a good course or perhaps take the spot price higher if 2017 production falters. Ag Canada has predicted a record export year for the 2016 mustard crop but given the record high USA yellow crop I believe the 2016 exports from Canada will be average at best. The current monthly export volumes from Canada to the USA suggest lower. 

Weather predictions from experts are mixed with some calling for significant heat on the Southern prairies and other predictors calling for a normal growing season. The mustard growing area for Olds Products and much of the industry stretches from Southern Alberta through Southern Saskatchewan and into Northeastern Montana and Northwestern North Dakota , is not expected to receive any major weather variations this year but all we really know is that the 2017 mustard crop is off to a good start.

I look forward to the period following the mustard plant flowering in late July and plan to do some crop touring/inspections through the mustard growing areas at that time. Please let me know if you have any questions.

Regards,

Walter

March 20, 2017

Spot prices for mustard, with the exception of brown mustard which remains level with last year’s contract prices, continue at price levels near 2015 lows. That 2015 price dip did not last long.  In response, mustard acres and production in Canada dropped from 2014 levels by 30%. In 2016, just as in 2014, a price increase led to a massive 50% increase in acres in Canada. Suprisingly, in 2016 USA production tripled from the previous year. USA production did not change in 2014.  

New growers – or at least long time absent mustard growers in North Dakota – were responsible for most of the staggering 300% increase of yellow mustard produced in the USA to 44,000 MT. It is very reasonable to assume that mustard acres in Canada and the USA will drop significantly in 2017 in response to lower prices, significant carryforward supplies and the improved canola prices in 2017.  Of course, there is still time for late adjustments to grower seeding intentions depending on market forces. Stocks/use ratio as of July 31, 2017 will increase to over 60% in Canada/USA and hit a nearly 10 year high after the near zero position as of the same date last year.

It is important to note that, despite the significant build up in mustard stocks in 2016, there is more to be heard from those acres that were not harvested due to a cool, wet harvest month in October and the effect of mustard being harvested at moisture levels over 9.5%.  When the moisture content is that high it can produce heat while in storage causing the interior seed color to turn brown or black due to combustion.   The sensitivity for heated mustard  is very low at 0.1% maximum in a No.1 Grade.

Olds Products has completed its 2017 contracting program for both regular and organic mustard with our past growers. Our grower turnover of 5% this year was mainly with organic growers. Mustard acres for Olds in 2017 are down slightly in the USA due to some better options with canola for a few growers, but similar to 2016 in Canada.

Helix-treated certified Andante and Centennial seed was shipped to Olds growers in Canada in last two weeks. The balance of our certified planting seed will be shipped to Canadian growers and USA growers in early April.

Severe winter weather in the past four months has slowed down the pace of Old’s grower pick-ups in Saskatchewan, North Dakota and Montana, but our YTD pace still looks good.  We plan to clean-out our contract growers entirely by the end of July, if they so choose. Alberta has maintained a very consistent weekly grower pick-up since last August.  If you are a contract grower and have not already done so, please let me know if you would like a bid for the 2016 production amount in excess of your contracted amount.

Please let me know if you have any questions or comments.

Thank you,

Walter

 

January 9, 2017

2016 has come and gone and has left an excellent supply mustard to move off farm in 2017 and that is always a good thing for Olds Products. Winter’s cold grip arrived in early December and along with large amounts of snow it has made loading trucks off farm more difficult. Fortunately, we got off to fast start from August to November with our farm pick-ups and could soon be at the end of shipping the contracted portion of total grower production. As mentioned in previous market reports, and has been the case in all previous years since we have contracted directly with growers, it is our goal to buy all the 2016 production (including extra or over-production) produced by our contact growers. Please let me know if you would like a bid and I will provide one for your additional production. Currently other spot yellow bids in the market are well below 2017 replacement values suggesting they will have to move up when earnest new crop prices are out. But brown bids are close to 2017 replacement values suggesting some customers or end users are short old crop. 

In Canada, above average yields and increased mustard acres in 2016 contributed to an increase of the expected stocks/use ratio as determined by Ag Canada.  At the end of the crop year, 31-July-2017, the forecast is 20% from a sold-out position as of 31-July-2016. It should be noted that Ag Canada increased the 2017 estimated exports to Europe by well over 20,000 MT as acres in Ukraine and Russia were lower in 2016 and yellow mustard values there have increased, but that has not yet borne out.  If it does not then the stocks/use ratio at the end of July will be more onerous at 30-35%.  

In 2016 average yields of 800 lbs/acre in North Dakota and Montana were below Canadian yields of 1000 lbs/acre in 2016 due mainly to more hail storms. A 20% stocks/use ratio represents 2-3 months’ supply.  Therefore, 2017 will require similar acreage levels to 2016 (approx. 500,000 acres in Canada and 50,000 acres in the USA) in order to maintain the 20% ratio. 2016 mustard acres surged in late spring after there was no rally in canola prices from near-record lows in 2015. Significantly higher 2016 contract prices for yellow and oriental mustard were largely determined by high spot prices for yellow mustard, no on-farm mustard stocks, and the record high prices offered for 2016 lentil production.

In 2017, the direct competition to maintain 500,000 mustard acres will be canola as lentil prices have decreased and the spot price for mustard has significantly retreated from 2016 levels. Canola price levels increased in Canada/USA in November and have since retreated off the highs. In short I believe contract mustard prices for 2017 will be lower than 2016, but increasing canola yields versus static mustard yields will keep 2017 contract prices very honest. 

It is our plan to start our contracting program in the last two weeks of January when we hope to be more certain pricing will work for all past growers. Olds Products has an excellent supply of certified mustard to offer and will again have seed treatment options.  I look forward to your questions or comments.

Thank you,

Walter