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Since 1897, Olds Products, Leaders in MustardFitzpatrick Bros.

2013 Crop Reports

December 16, 2013

Recently spot prices have moved slightly lower and new crop offers (tests) have been made by some mustard contracting companies. I believe the spot activity or trades to be very limited and mostly involve spot grower selling in Canada. The lower CDN dollar and lower spot price is perhaps adding some buying interest from processors (end users) but again, this is very limited due to the advance contracting that most processors do in the mustard market. The demand for condiment mustard in Europe (brown) and USA (primarily yellow and brown) is not decreasing and overall the 2014 mustard acres need to increase to compensate for lower carry forward inventory (less than a  two month supply at 31-July-2014). 

2013 Olds Products average yield (lbs/seeded acre) from contracted growers is as follows: 

                                   Alberta              Saskatchewan            N. Dakota/Montana                

Yellow- Andante             950                           975                                    800

Brown-Centennial           950                         1100                                    N/A                        

The average mustard yields for Olds Products are in line with the industry average for all mustard types (yellow, brown and oriental) of 1000 lb/acre reported by Statistics Canada for 340,000 seeded acres in Alberta and Saskatchewan. 2013 average yields in Canada were the third highest in many years (1986 ranks #1 followed by 1982) but with lower acres (330,000 acres)  the production was only slightly higher than annual demand- the mustard market that relies on Canada/USA dodged a bullet again. Europe will not be buying spot yellow mustard in 2014 from Canada due to cheaper and adequate supplies in the Ukraine. Yields in North Dakota/Montana were affected by early season drown out in Northwest North Dakota but elsewhere yields were very good. The reported average for all USA acres was 733 lbs/acre for approx. 45,000 acres. 

Olds Products contracted growers (with a few exceptions) have seen good mustard movement (approx. 40% picked up through December) thus far and as I said in my previous crop report we are looking to buy all the contracted and overproduction mustard. After we agree to a new crop contract price in January we can also price the 2013 overproduction when requested by the grower.

Olds Products will be contracting  directly with growers for the sixth consecutive year in 2014 and the plan remains the same as in previous years and that is to come out with a new crop price when it becomes more clear what price level is needed to continue mustard in the rotation by all past growers of Olds Products.  

I look forward to your comments, suggestions or questions.

Regards,

Walter

 

September 18, 2013

The Canadian and US mustard harvests are now in full swing in Alberta (25% complete), Saskatchewan (50% complete), North Dakota (25% complete) and Montana (50% complete) after a solid month of dry and hot weather.  The harvest weather will take a bit of turn to the wet and cool side this week but then it looks to improve again.  The continued prospect (from my last report) is for No.1 quality and above average yields (best in 10 years – average 23 bu/acre for all types).  The main contributors were the warm weather (not hot) during the flowering stage in July, the extended warm dry weather in August that allowed the crop to mature (threat of frost averted) and the huge reduction in hail loss from 2012.  The average yield for the Olds Products contracted acres could easily be double that of 2012 when we had to buy in spot market, the first time since we started contracting directly with growers in 2009,  to meet our process requirements for 2013.

At this time all of our contracted growers from 2012 and spot growers that we bought from are cleaned out (mustard bins empty) and despite the higher yield in 2013 we will need every pound of production, contracted and over-production, in our mustard processing operation in 2014.  We will pick up the contracted production from all Olds Products growers and then look to secure the remaining balance they have on farm before the end of the current crop year.  At this time, bids from other dealers are down at least several cents/lb from the peak this summer.   This drop in bid was to be expected given almost half the growers in Saskatchewan grow without a contract and spot buyers, in the absence of new demand, will provide a new crop bid level much lower now that the harvest is well underway.  If a spot grower has to sell now he will find a buyer, but his selling power is greatly reduced until the market fundamentals are clear to all participants. 

                                                                    2014(estimate)            2013                      2012

Yellow Acres (USA and Canada)                          250,000                 260,000                 270,000

Brown Acres (Canada)                                       100,000                 100,000                  80,000  

Oriental Acres (Canada)                                     30,000                   20,000                   30,000  

  • Brown acres were up in 2013 due to very low inventory levels at July 31,2013 – sold out at farm level.
  • Oriental acres down in 2013 due to fewer spot growers.
  • Yellow acres in 2013 virtually the same as 2012 – include 45,000 for USA
  • Mustard inventory levels at July 31, 2013 at farm level – 10,000 MT (one month supply) plus buyer inventory – 20,000 MT (two month supply)
  • Expected mustard inventory levels at July 31, 2014 at farm level – 20,000 MT (two month supply) plus buyer inventory – 30,000 MT (three month supply)
  • Minimum required acres for 2014 to meet lowest required inventory levels at July 31, 2015 (three month supply or approx. 30,000 MT)

The bottom line is that despite the higher average yield for mustard this year it does not significantly increase the narrow inventory that will exist at July 31, 2014.  If 2014 contract prices are lower than needed to sign the required acres, then a boost to the spot prices can be expected.

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

Regards,

Walter

August 6, 2013

Mustard crops in Alberta, Saskatchewan, North Dakota and Montana are making very good overall progress at this point. Except for a few fields in Alberta the blooming stage ended in the last two weeks and if the weather cooperates the harvest could start in the second half of August in Saskatchewan and Montana (about a week later start in Alberta and North Dakota).

Yields in general are expected to be significantly better than 2012 due to the milder summer temperatures during the blooming stage, favorable moisture that was received in the past month, and the reduced impact from hail thus far.  Germination this Spring was excellent and the plant population was very high that resulted in some crowding resulting in fewer stems per plant.  Pod development was very good in Alberta and Saskatchewan (8-10 seeds/pod), and in the USA 6-8  seeds/pod were common. Due to higher excess moisture this spring in North Dakota the yield potential is less due to significant areas affected by drown-out.  Weeds and other plants have come through in full force and some growers are considering using Reglone as a desiccant to kill the later maturing weeds.  In this case growers should wait for full maturity of the mustard before applying the desiccant.  The only registered desiccant for mustard is Reglone.  Round-Up is not registered for mustard due to the low MRL in the USA.  Another option for fields with many green weeds is to swath the yellow mustard (minimum 75% color change for seeds) and then let it mature further in the swath prior to combining.  

If you are considering any of these steps or have any questions please let me know and I will search out the options for you.  Moisture at harvest is critical and should never be higher than 9.5% for storage of any length.

The prospect of higher yields in 2013 has lowered the current spot price for brown mustard but the yellow spot bids seem to have held firm.  Despite the higher yields the forecast for mustard inventory levels from Statistics Canada at July 2014 will be lower by 40% (2-3 month supply) from July 2013 (4-5 month supply).  Spot mustard growers (approx. 50% of all mustard acres in Canada – mostly in Saskatchewan) may be looking to sell mustard this fall but only if:

  • grower perception is for lower prices in following 12 month period (will depend on demand from Europe and harvest in Canada/USA – news may not play out until October).

  • farm cash flow requires selling some crops.  It remains to be seen which crop (mustard, wheat, barley, peas, canola etc.) spot growers will market first and by that create the needed fall cash flow.  Very few crops offer production contracts like mustard and thus growers must make marketing decisions after harvest.

Olds Products does not rely on spot production of mustard (however we plan to buy all of our contracted growers’ production – including the spot portion as we have done since 2009) for its requirements and we will start to initiate shipping instructions for the contracted mustard after most harvest samples are received and analyzed.

Olds Products will be sending out harvest bags to each grower and providing instructions for submitting a harvest sample as soon as possible.  The harvest sample analysis is critical stage and provides our cleaning and processing stages the opportunity to see what they will be working with through October 2014.

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

Regards,

Walter

 

July 9, 2013

Statistics Canada released their seeded acreage report in late June and mustard acres were increased to 340,000 (335,000-2012) from just over 300,000 acres in the earlier report. Although the increase is significant there was no change to spot prices for yellow, brown and oriental following the report.  Mustard acres for 2013 are on the bottom end of the 10 year average and will need a good average production (800 lbs/acre) rate to increase the carry forward balance at the end of the crop year (July 31). Assuming the good average yield for 2013 the stocks-to-use ratio will be 20% and that will be at the 5 year low. The low ratio (approx. 2 month supply) will keep spot and contract prices very honest through 2013.

Crop reports from Saskatchewan and Alberta are overall quite favorable despite the late and cool start. All areas have received above average rain fall and crops are 1-2 weeks into blooming (1-2 weeks behind).  Hail damage was reported in Southern Alberta in the last two weeks and the effect to some growers was significant.  Lethbridge (where I live) has received three hail storms thus far accompanied by heavy rain.

Mustard acres seeded in the USA will be down slightly from 2012 to 45,000 acres due to the wet start that did not allow approx. 5,000 acres to be seeded.  Crop reports from Montana and North Dakota are somewhat less favorable than Canada due to the number of contract acres affected by the heavy rains (15 inches since May 20 in some key areas) and the late start.  Areas that have avoided the drown out are doing quite well but spraying was difficult due to the wet conditions.  This will affect the yield and purity.

I will be in Scott, SK next Wednesday (July 17) to take part in the mustard plot tour planned by the SMDC.  For more information please visit their web site by clicking here

I plan to do a mustard crop tour/inspection through Alberta, Saskatchewan, Montana and North Dakota in the next few weeks to view crops after the blooming is complete.

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

Regards,

Walter

 

June 5, 2013

Most mustard planting was completed in the last three weeks and since then most mustard growing areas (Alberta, Saskatchewan, North Dakota and Montana) have mostly received beneficial rain (1 inch-4 inches). These areas are now looking for some sunshine to promote growth of the plants that were quick to emerge this year. Mustard acres in Eastern Saskatchewan were the latest to seed and some mustard acres in Northwestern North Dakota were not able to seed in 2013 due to very wet conditions. The overall effect of the acres that did not seed is likely to be offset with some last minute spot acres that were seeded in other areas.   Overall mustard acres in Canada and the USA will be up slightly from 2012 (but near the 5 year low).

My estimate for 2013 (very close to 2012) is as follows:

                    Canada            USA
Yellow           275,000          50,000
Brown           50,000            0
Oriental         25,000            0

Saskatchewan producers will grow 75% of Canada’s mustard and 35% of Olds Products requirements. North Dakota/Montana producers will grow 80% of the USA total and 35% of Olds Products requirements. Alberta grows 25% of Canada’s mustard and 30% of the Olds Products annual requirements.

Spot prices/lb have changed little in the last two months and stocks (1-2 months supply) are very low (quality is good) at the farm level. Dealers (includes Olds Products) are holding 4-6 months supply in inventory. The demand for Canada/USA mustard is stable at 12,000 to 13,000 MT per month. The recent drop in the value of other oilseeds and grains has kept spot mustard from going higher.  

Current growing conditions are very good for mustard and the weather forecast from Environment Canada is for mostly normal conditions (precipitation and temperature)for the next 1-3 months. Due to the low stocks of mustard at the farm level there will be more attention given to the new crop development that is currently 1-2 weeks behind average development.

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

Regards,
Walter

 

April 5, 2013

I would like to welcome our new growers (25% of our total 2012 contract acres) to the Olds Products market report for mustard. It is our objective to retain (75% are past growers and we are aiming for 100%) growers and also, due to increased market share,  to find new growers who have grown mustard successfully and then keep them growing mustard for Olds Products for years to come. Thank you for choosing Olds Products. As the market leader in condiment mustard processing we strive to be the best option every year for the contract mustard grower.

My last mustard report was at the end of January and at that time Olds Products was starting to contract 2013 mustard production with growers in North Dakota/Montana and Alberta/Saskatchewan.  Encouraged by strong commodity prices, declining mustard production from 2009-2012, steady export demand and a 5 year low carry forward balance Olds Products set its contract prices of for yellow and brown. These prices represented a 7.5% increase over the previous year which we felt were necessary to encourage continued mustard production from our core contract growers. At this time, as far as I am aware, no other contract company matched our pure contract price for yellow but instead countered with reduced planting seed prices and/or early delivery. Although the contract price represents 100% of our planned purchases other companies have more reliance on buying spot to better match their customers buying patterns. In order to buy lower in the spot market you cannot have a higher mustard contract price. Hope has to be in the present.

Current spot prices remain firm. Due to lower yields in 2012 Olds Products was active in the spot market for the first time since starting our direct contracting program with growers in 2009.

At this time winter still has a grip on the entire mustard growing area. Snow cover is 1-2 feet deep except in South Alberta where only a recent snow lies (6 inches). Temperatures have been far below normal and the prospects for early seeding have been dashed. South Alberta will still likely be the first to seed (1-2 weeks away) but other areas are 2-4 weeks away if not more.

Mustard is a short season crop (90-95 days) and this may bring more acres to spot production at the end of May. Olds Products completed the 2013 grower contract program at the end of March in order to have planting seed shipped as early as possible if needed.

Last week we began our certified planting seed delivery to Canadian growers and it will be completed this week. Our North Dakota/Montana growers can expect to receive their planting seed starting at the end of next week.

I look forward to working with all of you this growing season. Please let me know if you have any questions.

Regards,

Walter

 

January 30, 2013

Old and new crop yellow mustard values in January have not changed from December until today.

Through January, spot prices remained firm and new crop bids were at a similar level.  I recently presented a market report in Saskatoon (Crop Production Show- SMDC annual meeting) where I indicated new crop values would have to move higher to get significant interest from 2013 contract mustard growers.  At this time most contracting companies that came have bid for yellow remain at thier original bids.  I remain convinced that the mustard market for new crop is too low and therefore we have chosen not to join at the same level.

My view is supported by the following trends:

  • Market reports from Europe indicate most countries (Hungary, Czech) that were large exporters of mustard to Western Europe have shifted to growing other oilseeds and no longer are significant in the mustard trade. This could add pressure to the demand for Canadian mustard in future years.
  • Canola acres have been surging and mustard is risking losing more acres in all growing areas in Alberta, Saskatchewan, Montana and North Dakota
  • Smaller carry out balances

Mustard is a great crop to grow and a wonderful spice/oilseed for Olds Products to  process and market as a condiment. The positive features that mustard has are quite numerous and it is no wonder that many of those features are now in newer canola varieties. The demand for mustard (yellow and brown) is not going away and growers who grow for Olds Products can be assured the requirement for their acres will not change from one year to the next.

Please contact Bart (403-540-2629) or Peter (403-860-7008) Hribar to inquire about growing your new crop mustard acres with Olds Products.

We are offering a 10% reduction in our certified planting seed prices in 2013 and thereby be competitive with your local options.

Regards,

Walter