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Since 1897, Olds Products, Leaders in MustardFitzpatrick Bros.

2010 Crop Reports

December 20, 2010

Statistics Canada reported their final supply/demand numbers for 2010 (see link below) on December 3 and the result was an increase of 70,000 (was 410,000) in the 2010 harvested mustard acres and an increase of nearly 30,000 MT (was 160,000 MT) in the 2010 mustard production! The added production added 25,000 MT to the projected carry out inventory at July 31, 2011 to a hefty total of 100,000 MT of which 60,000 MT is projected will be held by non-contract or spot growers. The balance, 40,000 MT will be held by dealers and will be delivered to end use customers from August-November 2011. At the current rate of export there is enough spot supply to last until May/June 2012 without adding any mustard acres in 2011. Statistics Canada production estimates are based on a random and mandatory survey of growers in Canada.

In the United States the carry over yellow mustard inventory from 2010 at July 31, 2011 will be 5,000 MT and all will be held by dealers (none held by growers) for delivery to end use customers in August-November 2011.

Spot bid levels (20-24 cents/lb) to growers remain low as spot demand remains quiet. 2010 contracted mustard is moving (farm to cleaning plant and then on to processing) on a very steady pace and this supply will keep end use markets in Canada, USA, Europe and Asia covered through 2011. The best chance for spot demand is from Europe but that market appears comfortable and is currently paying USD 550/MT (25 cents/lb) delivered Rotterdam for cleaned spot yellow from Eastern Europe.

While the mustard market grapples with the apparent current excess inventory, other agricultural commodity markets deal with tighter inventories and more immediate bullish indicators. Canola has been recently trading near annual highs as have wheat, corn and soybeans. Canola acres are expected to increase to over 18 million acres in 2011 (16.8 million-2010) and this has and will pull mustard acres in 2011. Canola has potential to yield 50% more than yellow mustard per acre and in order to be competitive mustard would require roughly a 50% contract price premium (30 plus cents/lb). The current spot mustard market (23 cents/lb for yellow) is not close to the contract level needed to seed the normal 250,000 acres needed to supply the contract market.

If the Statistics Canada numbers hold true then we should expect a dramatic decrease in the mustard acres for 2011 but we will not know until after the mustard is planted. Many spot growers are patient and with improved farm cash flow the mustard can be stored for a long time. Some of the spot mustard will be sold into the 2011 contract market for future delivery but the upside will be limited to the contract price. 

In my last report I noted that only 20% of the production would be No.1 quality in Canada and USA and that is turning out not to be the case. Damage levels are less than I predicted (much of the rime or white seeds are not a grading factor) and more than 70% will be No.1 in Canada but in North Dakota the damage levels are higher and only 40% is grading No.1. We have been able to upgrade some of the damage in the yellow by using gravity tables (remove the lower weight grey seeds) and spirals (remove the sprouted and shriveled seeds).

Olds Products will be aggressively contracting acres with our growers in 2011 to supply our requirements and those of our customers for a large part of 2012- this is our normal practice. I will work with Bart and Peter Hribar in January through March to ensure the contract price for mustard is sustainable. We will again supply certified Andante and Centennial planting seed to all of our contract growers. Our brown acres will be reduced this year due to the decrease in European demand caused by improving Eastern European supplies, strong CDN dollar and volatile container shipping rates.

I hope to start our contracting program in mid- January and I welcome any comments or questions you may have.

Merry Christmas and Happy New Year!

www.statcan.gc.ca/pub/22-002-x/2010008/t022-eng.pdf

 

November 10, 2010

The mustard harvest was finally completed in late October (another near escape) and many of the harvest samples from Olds Products contract growers have been received and analyzed. 

The highlights for 2010 Yellow Mustard are:

  • Significant amount of damage in all growing areas (Alberta, Saskatchewan and North Dakota), otherwise quite clean (few black)
  • 20% No.1, 70% No.2-4 and 10% sample grade (normally Canada/USA produce 85% No.1 quality)
  • 2010 damage consists mainly of rime (white color throughout seed cover) but green, gray/brown weathered seeds and shriveled/shrunken seeds are also present
  • 100% Andante variety
  • Yields- mid range average is 900 lb/acre (largest yield was in Alberta-2000 lbplus/acre)
  • 10% of Olds contract acres affected by “drown out”- flooded fields, reduced yield, many stages of growth, weed and dockage issues
  • Moisture is in the upper end- 7- 9% 

The highlights for Brown Mustard are:

  • Brown Mustard samples look very good (mostly Saskatchewan production) with low dockage – 90% No.1, 10% sample grade
  • No canola admixture
  • 100% Centennial variety
  • Yields-tight range of yields with average 1100 lb/acre

The market will have to adjust to the lower quality (caused by long, cold, and wet harvest season) of 2010 yellow. The higher damage caused by rime affects the mustard flour industry more than the wet millers but there is no doubt the appearance of clean yellow mustard shipments to buyers will be quite different this year. The last year the industry was challenged with lower grades was in 2004 (similar growing conditions to 2010).

Spot prices for yellow (23-24 cents/lb), brown (20-22 cents/lb) and oriental (23 cents/lb) have been slow to move higher this year compared to corn, wheat and canola but it is very likely occurrence in the next few months as the market adjusts to the lower yellow quality plus the annual need for contract acres in 2011 will start in January. 

Many growers have asked me why spot prices did not move higher this summer in light of all the 2010 growing problems. Historically the mustard market has very few speculators on the buying side but on the growing side as much as half the acres in Canada every year are grown without a contract. This has the effect of spot prices reacting more to the downside (more sellers chasing no buyers) until some spot demand develops. More buyers are becoming aware of this and there is a trend (not Olds Products) to more speculation in the last two years rather than commit to a contract price in the normal annual contracting period -January/April. The pitfalls to this strategy are enormous and run contrary to the proven contract strategy.

Olds Products will start our grower contracting program in January and given the outlook for other commodities we will have to be attractive in our pricing. I plan to address our pricing in my December crop report.

Movement for yellow mustard from farms started in October and will continue to be strong through the first week in December when we shift to Brown mustard for two weeks. Please let me know if you have any questions or concerns.

 

October 7, 2010

The wet miserable weather in September has been replaced with warm and dry conditions and the forecast into next week looks the same. Except for some local showers the mustard growing areas in Alberta, Saskatchewan and North Dakota/Montana have had high temperatures in the low 20’s C and no rain over the last two weeks. The harvest is moving ahead in a big way and after this week the 2010 mustard harvest should be 90% complete. It is an incredible turnaround. 

One question remaining is the quality of the 2010 yellow crop. A couple of significant frosts hit all growing areas in September and this will affect late maturing crops. It appears to me that most of our brown acres escaped the effect of the frost but the yellow mustard may have more damage than normal. Yellow mustard is relatively frost tolerant and we will wait for the harvest samples to evaluate the green damage.

Some of the mustard that was harvested prior to the recent dry conditions was stored at high moisture levels by growers. The dry and warm conditions have allowed the aeration features of the farm bins to dry down the mustard below 9.5%.

Last Monday (October 4th) Statistics Canada reported the expected 2010 mustard yield and production along with forecasted export demand for 2011. Their forecast is an average yield of 855 lb/acre (2nd highest in last 5 years), harvested acres of 410,000 (2nd lowest in 5 years) and demand at 156,000 MT (2nd highest in last 5 years).  The only change from their September forecast is an increase in the yield by 80 lb/acre (10%). I believe the demand trend for Canadian origin mustard is lower due to increased mustard production in Europe but the report’s high number may be assuming production problems caused by drought in Eastern Europe. Europe does have a comfortable mustard inventory from 2009 (as does Canada, but the US farm inventory is virtually zero) and it will take at least a few months to see if more demand is coming this way.

The USDA forecast reported 2010 US yellow mustard production at 16,000 MT (25% below 2009), acres at 52,000 (no change from 2009 and the trend is flat) with an average yield of 750 lbs/acre (25% lower than 2009 due to drown out acres).

Spot mustard prices moved higher by only a few cents/lb (currently FOB Farm CDN 24 cents/lb for yellow and 20 cents/lb for brown) in the last month due to worries about the pace and quality of the harvest. I do not expect spot prices to move lower as we approach 2011 due to the competitive contract prices that will be needed to get mustard acres next year.

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

Olds inventory of 2009 crop yellow will need to be replenished soon and we expect to give significant shipping orders to contract growers for 2010 crop starting in October. Our inventory of brown mustard from 2009 is higher and shipping orders to growers will be slower to develop- perhaps November/December. 

 

September 15, 2010

Wet, wet, wet and Delay, delay, delay. That has been the case again for growers in Western Canada, North Dakota and in Northeastern Montana in the past two weeks. The forecast next week in Western Canada is more of the same. We are expecting close to 2 inches (50 mm) to fall here in Lethbridge in the next 4-5 days and we will set rainfall records in 2010. Temperatures have been very cool and many mustard crops need heat so they can mature and ripen. The good news is that we have not had a significant frost that would kill the plants and effectively fix the green or immature seeds but that could change Friday when a significant frost is forecast on the Canadian prairies.

Much of the brown mustard is grown in Saskatchewan and has been cut and awaiting dry weather for combining. The yellow mustard is generally not cut prior to combining and it will dry down faster after a rain. Agriculture Canada is reporting only 25% of the mustard is combined at this time compared to 75% average for the last 5 years. North Dakota and Montana are further ahead with 50% completed. Other crops also need to be harvested and the pressure on growers to get them under cover is mounting.

Mustard markets remain relatively quiet but that could change if the frost affects quality and blending is necessary by dealers to achieve a No.1 quality for their customers. Last year we escaped a late maturing mustard crop with the hottest and driest September in the 125 years.

The safe moisture level and our maximum level for acceptance is 9.5%. The risk for combustion in the stored mustard at higher moisture levels is significant.

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

 

August 11, 2010

I did a tour of our contracted yellow and brown mustard fields (along with some phone surveys) in North Dakota, Saskatchewan and Alberta in the last 7 days. Overall the outlook is positive (average yields-20-25 bu/acre for Brown and 16-20 bu/acre for Yellow) but there are significant challenges remaining for all mustard growers. These include:

  • Drown out areas caused by flooding have caused some significant weed and yield problems-affecting approx 10% of acres-mostly in eastern regions
  • Crops are 2-4 weeks from harvest due to late seeding, surplus moisture and lack of heat
  • Avoid hail and severe storms that are plentiful this year
  • Rain has to stop- the forecast is for above average temps but in the eastern half of the mustard growing area (Eastern Saskatchewan/Montana and North Dakota) above average rainfall

Overall crops in the western regions of the mustard growing area are doing the best and some Olds contracted fields in North Dakota are also looking very good. Growers with weed problems and different stages of growth are considering either swathing, waiting for latter stages to mature or spraying in the coming weeks with Reglone (registered for mustard) to dry down the green weeds.

Market prices for mustard are slow to react (but moving off lows- 22 cents/lb for yellow and 16 cents/lb for brown) to harvest challenges and this year is no exception given the ample carry forward of mustard from 2009. Once the harvest is complete and that information is digested along with possible additional demand from Europe/USA then new trades will set a direction where the market goes. At this time the market is factoring the late harvest will not have quality problems associated with frost or delayed harvest quality due to wet weather.

Grain and oil seed markets have rallied in the past month and this will provide higher floor price for mustard as we move closer to winter. Spot prices are now well below the replacement price (to grow again) and this will have a boosting affect to prices as we move through this year. Canola crops are also behind in development but the yield potential is very high (canola will outperform mustard in a cool wet year but mustard stacks up well when put to the test in a hot and dry year) this year.

Sample bags will be mailed to contract growers in the next few days along with return mail information. I hope to provide a more definite shipping order schedule upon receipt of all representative samples. Please let me know if you have any questions.

 

July 9, 2010

Statistics Canada estimated (largely based on random phone survey) in early June that 510,000 acres of mustard would be seeded in 2010. Combined with 50,000 yellow acres in the USA, the outlook for mustard was for an excessive supply (almost 90 % by Stat Can estimates) through July 2011. Since those reports were issued, most of the mustard growing area received record amounts of rain and Statistics Canada adjusted the seeded acres for mustard to just 423,000 acres (18% less) to account for the high amount of rain - especially in East/Central Saskatchewan. Other areas were largely able to seed (many farms seeded mustard over a longer time period this year- 1 month in some cases) and although challenges exist (weed control, very wet sections in fields affect 10% of total acres-result no yield on those acres), the outlook for the seeded acres is generally good. The weather forecast for the mustard growing area for July-Sep ’10 is:

  • Western half (Alberta, Western Saskatchewan) is above average temps and below average moisture
  • Eastern half (Eastern Saskatchewan and North Dakota) is above average temps and above average moisture

Despite the adverse weather in June, mustard markets moved very little in terms of pricing and trading due to a higher than normal carry-forward inventory from 2009 and the good outlook for the mustard that was seeded. Customers secured their 2011 mustard requirements earlier this year and at this time most of the delivery risk of a crop failure is with contracting companies that entered into contracts with those customers.  Contracting companies will manage that risk by buying some spot mustard if they estimate the 2010 outlook is getting worse or if spot demand arises. The most significant source of spot demand, after weather, has been the erratic buying (mostly yellow) from Europe over the years - due to supply problems in Eastern European countries.  Unlike other commodity markets, mustard will normally trade only once from the time it leaves the farm and when a processor accepts delivery to make condiment mustard, flour, sausage, etc. There is virtually no speculative interest in mustard other than when growers seed mustard without a contract.
           
Growers
I plan to do some crop inspections in the first two weeks of August. Unless you have already done so, please provide your legal land description, the acres you seeded, and the condition of your crop at this time. I will send cloth sample bags to you in August, along with instructions for sending your representative sample(s) to us. Thank you.

 

June 14, 2010

One month ago the forecast was for drier warmer weather across the prairies. Instead wet weather dropped 6-12 inches (250 % of normal) in the last month. The area most behind in mustard seeding is the central/eastern part of Saskatchewan where reports show only 60% of the mustard has been seeded. This area accounts for 15% (approx 40,000) of the total mustard acres in Saskatchewan. Other areas in Saskatchewan are 70-90% complete with mustard seeding but many fields are under water and their yield potential is greatly diminished. One report from Saskatchewan Agriculture shows only 71% of all the intended mustard acres in Saskatchewan as seeded (270,000 acres of forecast 350,000 acres). If dry conditions arrive this week (warmer weather is forecast) then a hope to seed still does exist. Last week the CWB (Canadian Wheat Board) released a report that 8-12 million acres (worst in 40 years) will not be seeded in Canada this year. Growers are using many different techniques to seed their crops and not get stuck in the mud but it is very difficult to get any equipment in the fields. Crop Insurance in Canada has extended their latest seeding date to June 20. These late crops will need a lot of help in the way of a warm/dry September.

Olds Products contracted mustard growers (estimated 90% seeded) in Alberta, Saskatchewan, Montana and North Dakota are reporting (50% reported their results) excellent germination and very good crop development thus far. Seeding dates range from late April to late May in all areas. Some growers in North Dakota have sprayed for cutworms and in Canada the diamond back moths are making an appearance in some areas this year.

Spot mustard prices (reported bids to growers are 22 cents/lb for yellow and 16 cents/lb for brown) have not yet been affected by the above news but given the large carry-forward inventory from 2009 and the lack of spot demand (from foreign and domestic buyers) it is no wonder. Most of the mustard demand through much of 2011 was contracted with growers earlier this year but overall demand for mustard grown in Canada/USA is going to be down in 2010 and 2011 (15% overall from 2008 and 2009) due to increased mustard production in Eastern Europe and less reliance on Canadian mustard (down 30% from 10 yr average) from Western Europe. One large buyer in Europe has a company directive that includes sustainability. Their view is that the high transport cost of moving Canadian mustard to Europe in containers is not sustainable given the cheaper option of more local production in Eastern Europe.  The slide of the Euro currency and the GMO issue for Canadian is not helping matters for mustard grown on this side of the Atlantic. The lower cost has to be weighed against other factors such as consistency of supply and quality but those are being managed through closer relationships between the European buyer and European supplier. Twice in the past 10 years (2002, 2008) the European supply of mustard was short as much as 40% of demand and their only option was North American supply.

The next month will provide more information about what did get seeded and how the seeded acres are developing. Please let me know if you have any questions or comments.

 

May 12, 2010

Cool and wet weather over the last 2-3 weeks in much of the mustard growing area of Canada and the USA halted early season mustard planting. At this time only 10% of the mustard is seeded (normally 75% complete) but the moisture (2-4 inches) from the rain/snow mix was generally very well received by mustard growers. The current weather has turned warm and the forecast looks favorable for seeding through the next two weeks. 

The later seeding dates for the 2010 mustard acres will likely decrease the potential for yield (unless we have a cool July and a warm September- i.e. 2009). The 4 month forecast for the mustard growing area as provided by Environment Canada is for hotter than normal temperatures but also for above normal moisture. These conditions would be quite favorable for 2010 mustard growers.

Current spot prices for mustard (22 cents/lb yellow, 18 cents/lb brown, 20 cents/lb oriental FOB Farm) are unchanged from last month and very few trades are occurring between growers and dealers. The result is very high current on-farm mustard inventory (even with most of the contracted mustard already picked up) and until additional demand from Europe surfaces (due to production problems this spring/summer or fall) it will likely be quiet in the market. On farm inventory of mustard at March 31 is estimated by Statistics Canada to be 120,000 MT (one year supply includes yellow, brown and oriental) which is close to the levels in 2005 after the big production year in 2004. 

Seeding intentions for mustard may still reach 500,000 acres in Canada due to some late decisions by growers to grow mustard but the likely number is closer to 450,000 acres. In the USA (North Dakota, Montana, Idaho and Washington) the expected acres for yellow mustard are 65,000 acres (50,000 acres in 2009). Unlike Canada where half the acres are grown without a contract, the USA acres are almost all grown under contract in order to qualify for insurance. I expect brown mustard acres in 2010 (my estimate is 50,000 acres- 50% drop from 2009 and a 100% drop from 2008) to show the largest drop from 2009 due to the large inventory on farm and the decrease in demand from Europe- due to more local production there. Oriental acres (40,000) will remain consistent with 2009 as will yellow acres (350,000).

At this time in 2009 the outlook for mustard prices was bullish and a warm/dry September was the big game changer. Today, the outlook for mustard prices is quite bearish given the farm inventories, lower demand from Europe and the favorable outlook for growing conditions in 2010. History tells us the spot mustard market can be volatile and that it can change overnight with very little notice for market participants. 

 

April 13, 2010

I would like to welcome the Olds Products 2010 mustard growers. Your certified planting seed was delivered in the last two weeks and we look forward to a productive and rewarding year for you. 

Mustard prices have continued their softer tone in both spot and new contract markets since early January. Contract prices have eased to 22 cents/lb for yellow and 17/19 for brown and oriental but most contracted mustard acres in Canada/USA were signed at 26 cents/lb for yellow and below 20 for brown/oriental. Olds Products contracting program started in mid January at 30 cents (yellow) in Canada and we signed one last yellow contract at 24 cents. Our contracting program required certified seed and we were consistently higher (Olds average contract price is 27 cents for yellow and 24 cents for brown) than our competition throughout the contracting year. We continue to see value in using production grown only with certified seed. 

Spot prices have also moved lower since 2009 harvest and they are in line with current contract prices.

The problem or opportunity with lower spot mustard prices has everything to do with low demand and higher supply. Buyers have been slow to react to the lower prices- mainly because:

  • the currency exchange rate for USD is down almost 20% from one year ago
  • they have contracted their requirements for all of 2010 and it is only April (historically North American buyer’s sales estimates for the following year are just now being gathered)

The spot sellers have clearly blinked (higher production/acre and full bins will do this) and in this environment prices will go lower until some spot demand surfaces and takes out some low priced supply.

The demand fundamental for Canada/USA may have changed given the increasing yellow and brown production in Eastern Europe- mustard carry-forward supplies are now (based on Statistics Canada supply/demand info released today) sufficient to meet normal market demand through June 2011 (Canada/USA is now long almost 1 year of supply- largely held by non contract growers). After June 2011 we need only 60,000 MT of 2010 production to meet normal demand to December 2012. Normal annual demand for Canada/USA was 125,000 MT (65,000 MT Yellow, 40,000 MT Brown and 20,000 MT Oriental) but the number may be 100,000 to 110,000 MT (55,000 MT Yellow, 25,000 MT Brown, 20,000 MT Oriental) in future years. 

Europe annually uses 40,000 MT of yellow and this normally comes from Eastern Europe but as we know they run short they will come to Canada and pay almost any price as was the case most recently in 2001 and 2008. Prices could rally this year but only if we see a significant production problem in either Canada/USA or Eastern Europe. 

Mustard acreage for 2010 is now estimated by Statistics Canada to reach 500,000 acres (earlier I thought acres would be closer to 400,000 acres but that was before all commodities slid lower) and this will not be supportive for higher spot or contract prices. It seems that despite the low values for mustard it is still relatively attractive for a grower to seed. I estimate that at least 50% of the acres this year will be grown without a contract (Canada).         

Moisture conditions in the western and northern mustard growing regions were very dry this winter and early spring but this week a large winter/spring storm is moving through a large area with some much needed moisture.

 

March 8, 2010

March is upon us and it will not be long before seeding starts (mid April) in both Canada and the USA. The weather in Southern Alberta has been very warm the past two weeks with most days above 10 C (forecast is for snow tomorrow). Seeding plans for acres are slowly developing this year and March will be the key decision month for both processors and undecided growers. Given the drop in almost all agricultural commodities some analysts are predicting an increase in mustard acres (550,000-600,000) this year over last year. I disagree and my view is still 400,000-450,000 acres given the lower demand from the export market. The signals (low carryover, high prices and strong demand) that speculative spot growers need to see to add mustard acres are not evident this year. Last year 50% of the mustard in Canada was grown without a contract and much of this is still in the spot grower’s bin. These growers will not be looking to add to their long position of mustard by growing more until they can move some of it out.

The winter in the mustard growing area’s of Canada and the USA range from dry in the north (very little snow on the ground) to 2-3 feet of snow on the ground in North Dakota. All areas report a lot of fog this year and the story (tale) behind this is that moisture will follow in 90 days. Subsoil moisture is poor in Alberta and Western Saskatchewan but generally good in Southern Saskatchewan and Western North Dakota. 

We are cleaning brown mustard at Weinlaeder’s this week and next and the plan is to start cleaning yellow again in the week of March 22. We are planning to bring in more yellow from farms starting in the first week of April. This is the busy season (through June) for processing yellow mustard and we are going through it at a good clip.

Spot bids in market have moved lower in February to 24-25 cents/lb basis No.1 FOB farm for yellow and 18-20 cents for brown. We continue to contract new crop yellow acres at 27 in Canada and 26 in the USA - contact Bart Hribar with your new crop inquiries (800.233.8064 x636 / barth@shaw.ca).

 

February 7, 2010

January and February, thus far, have produced some big market swings - roughly 10% across the board. Stock markets moved lower, most commodities moved lower (higher inventories and possible lower demand in China), the Euro moved lower (Greece, Spain, Portugal etc. have huge budget deficits caused by stimulus).  Mustard has held up well in terms of spot pricing but I believe mustard acres will be down sharply this year from earlier reports (less than 400,000 acres in Canada- split 275,000 Yellow, 75,000 Brown and 50,000 oriental) unless spot demand spikes significantly higher in the last 6 months of the crop year. High farm inventories of mustard that were grown without a contract in 2009 will likely wait another year for the market to be more receptive. Stats Canada recently released a report that showed mustard exports since August 1 were down over 30% from all previous 5 years for the same 6 month period.  At this time of the year the spot price of mustard and the contract price (replacement price) “compete” to determine what price will “set” the market. 2008 and 2009 contract prices were largely set by the spot market which had historic highs caused by a spike in demand from Europe and lower yields in Canada/USA.

What has changed in the last year? 

  1. We had a big crop in 2009-at least much bigger than was ever expected has this has delayed and shifted buying in the spot market.
  2. Europe is growing more - not just Ukraine and other European countries but also France (province of Burgundy in France will produce again a significant amount of Brown mustard in 2010).
  3. North Dakota, Montana, Washington and Idaho produced 23,000 MT of yellow in 2009 (40% of US demand). Yields were 80% higher in 2009 from 2008.
  4. GMO concerns in Europe are at a 10 year high after Austria found a trace amount of a non registered GMO (GT73) in a bottle of Dijon mustard.
  5. Freight rates are moving higher. Container rates to Europe are up 100% from 5 years ago and expected to move higher by another 50% this year as shipping lines reduce their capacity.
  6. Credit availability.

What has not changed?

  1. Demand for quality - No.1.
  2. Demand for consistent supply.
  3. Demand for competitive pricing from retailers.
  4. Mustard is a wonderful natural ingredient with many functional properties for making the condiment, sauces, salad dressing, sausages.
  5. Canada is the primary exporter of mustard given the diversity and size of the mustard growing area.
  6. Breeding program for producing innovative varieties that customers want.

Olds Products, through our contractors (Bart and Peter), is offering production contracts for 2010 at 28 cents for yellow and 24 cents for brown in Canada. Our price in North Dakota and Montana is 27cents/lb. We are excited about the potential for the industry and that includes growers, processors and retailers and consumers. There is no doubt that the industry faces some challenges that are noted above but the prospects for sustained growth in the mustard industry are also present. 

February has been an excellent month for moving yellow from farms and in the first half of March we look forward to a strong pull for the brown mustard. It is my intention to provide bids for the 2009 mustard contract over production portion when you request it and to bring in the over production after the contracted mustard is delivered. 

Please let me know if you have any questions.

 

 

January 11, 2010

Happy New Year from a field in Southern Alberta! The field produced a very good crop of yellow mustard in 2009 and was used for photos taken in the spring, summer and fall.

 


At this time of the year the interest in mustard partly switches to new crop-2010. Of course there is still interest in 2009 crop – delivery and over production prices remain very important.   

Grower Delivery
The first six months (Jan-June) are very busy months for the Olds Products Pleasant Prairie production facility that supplies condiment mustard to grocery chains in Canada and the USA. Orders for yellow mustard from farms will be very strong during this period. The cleaning plant (Weinlaeder) in Drayton ND will be starting up yellow cleaning again on approx Jan 21-25 after a brief break. They are currently cleaning the brown mustard that arrived in November. I expect to give some more brown shipping orders for shipment in February/March.

Over Production
Spot prices for yellow and brown appear to have found a range for the time being- mid 20’s for yellow and oriental and low 20’s for brown (FOB Farm). As is the case, whenever ample spot inventory exists, the mustard market will test price levels that are lower than those that are considered “fair and reasonable”. This year is no different. I believe 28-30 cents is a price that many growers would accept as fair in the spot market but that is being tested with lower bids in the market. Spot demand has been slow to develop (partly due to an efficient contract market that is providing shipments to customers thus far into the marketing year, partly due to a stronger CDN$, etc.) and that could also be a reason for the current bid levels to growers. I estimate spot demand (needed before Nov 2010) for yellow at 10-20,000 MT, brown and oriental at less than 5000 MT each. Interest to lock in a spot price has been very light from our contracted growers thus far. The Canadian dollar is now trading at 4% discount to the USD which brings the above CDN $ prices roughly 1 cent/lb lower (i.e. 28 cents Canadian is 27 cents US) in USD.

New Crop

New crop prices will be down (at least in CDN$) from 2009 but they will have to be honest to attract the 500,000 acres (roughly 350,000 acres yellow, 100,000 brown, 50,000 oriental) that are needed for the 2011 shipments to world customers. Approximately 60% (50%-2009) will be contracted with growers and the balance will be grown with no contract. Canada narrowly escaped a poor crop in 2009 (a long, cool and late growing season was very fortunately followed by an exceptionally warm and dry September) and speculation in mustard has not cooled much after the record high spot prices in 2008. Historically, after high spot prices, mustard acreage increases significantly in the following year but this was not the case in 2009 after high spot prices through all of 2008.

It is my plan to have a new crop price available this week- one that will attract the core mustard producers in Canada and the US to Olds Products. I will be working with Bart and Peter Hribar to roll out our 2010 contracting program. We will have certified seed available for all of our contracted acres in 2010. Please let me know if you have any comments about the spot or the new crop price. All of my earlier crop reports can be read on our website- see link below. Thank you.

 

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