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Since 1897, Olds Products, Leaders in MustardFitzpatrick Bros.

2015 Crop Reports

December 12, 2015

Virtually all 2015 harvest samples from Olds Products contract mustard growers have been received and analyzed (we also send a portion of the each sample to the CGC for NIR testing- protein, oil, etc.). The results, both quantity and quality, are very much in line with what I reported in October when approximately half of the samples had been checked. Yellow yields are definitely on the lower end since 2009 when we first started contracting directly, but sufficient to meet our demand for most of 2016. The 2015 results are:

                                                                2015 Avg. Yield (lbs./acre)           2015 Cleaned Quality

                Yellow   -AB                                          600                                           No.1

                Yellow –SK                                             700                                             No.1

                Yellow-ND/MT                                       750                                             No.1

                Brown-SK/AB                                       1100                                             No.1

Due to the lower yields for yellow, assuming similar results for the industry, the spot price has moved higher since October, but it may have reached a peak due to oversupply in other mustard growing areas in the world.  Despite the higher spot price (price inelastic) it is expected that Canada will continue to export approximately 10,000 MT per month through 2016. 

At this time Olds Products has bought very little at the current spot price (we will very likely only buy from contract growers in 2016) due to the lower yield and most if not all of the contract growers know the price is not going down due to the fact that it will be sold out before the 2016 harvest. The biggest limiting factor to the spot price thus far, and will be for 2016, is the lack of additional  demand from Western Europe due to both Russia and Ukraine having both good carry forward stocks and  good yellow mustard production in 2015. 

The currency effect (CDN $= USD.73) should have pushed the spot price in CDN $ higher but I believe most of the demand is coming from Canada (dealers who are short their sales, dry millers who buy normally buy spot) and until a spot bid is ineffective (not buying spot mustard from growers) it will remain the same. 

Some dealers have been quick to come out with a contract price for 2016 and much of the reason is to also cover short positions – especially when the spot price is higher. Even though the 2016 crop will not be available until September dealers will hope their customers delay some of their orders to the latter part of 2016. 

Olds Products will have a contract price out in January but not before we are comfortable that we have a price that will work for all of our contract growers. A year ago industry spot bids for yellow mustard were at a non-inspiring price and soon after pulse prices (lentils) started to heat up. The result was a dramatic decrease in 2015 mustard acres in Saskatchewan. Even though the Olds Products yellow contract price was set in January 2015 it was not enough of a hint to the market to prevent the mustard acre decrease in SK.

Also, a year ago I reported that that the on-farm mustard pick up was moving along very well and I can say the same again this year. We will continue with the same pace and expect most Olds Products contract growers to be cleaned up by June at the latest. 

We have a sufficient supply of certified planting available this year to meet our 2016 contracting program and we look forward to working with all of our past growers

I would like to wish our contract growers, our customers and our readers a Merry Christmas and a Happy New Year.

Walter

October 9, 2015

Olds Products has been receiving harvest samples from contract growers over the last month and to date approx. 40% of the samples (85% harvested) have been received at our office in Pleasant Prairie. I expect the remaining samples to arrive in the next 2-3 weeks after hearing harvest updates from contract growers this week – growers either harvested last week or should finish up this week (before Thanksgiving in Canada). The quality of the samples received thus has been very good but we do expect some samples to have higher counts for green (immature) seed but not enough to cause a down grade (higher than 1.5%)

The harvest delay this year was caused by a number of factors and they include:

  • Uneven germination caused by cool dry weather after seeding

  • Mid-late summer rain that brought new growth to plants

  • Hail in summer months brought new growth to plants

  • Rain in September

Yield prospects for Olds Products contracted yellow has fallen by 100 lbs/acre from my last report to just over 625 lbs/acre forecast average (range is 400 lbs/acre -850 lbs/acre) for Alberta/Saskatchewan and 725 lbs/acre forecast average (range is 350 lbs/acre-1050 lbs/acre) for North Dakota/Montana. Yield prospects for brown and oriental have moved higher from my last report to approx. 1000 lbs/acre average for Alberta/Saskatchewan. 

Despite all the adverse growing conditions this year most growers are pleased with the resiliency of their mustard. Actual results for yellow were below some pre-harvest expectations but pod shelling did occur due to extreme winds/hail in late August in key growing areas in southern SK, northern ND and MT. The brown mustard was mostly grown in areas of SK/AB that were not as affected by the late season extreme wind/hail event.

Spot prices have firmed for yellow mustard in the last month. On farm yellow mustard inventory will be very scarce in the summer of 2016 but we should not see a return to 2001/2002 and 2007/2008 high spot prices when we had the perfect storm that included:

  • Low carryforward stocks (same this year)

  • Low yellow yields (same this year)

  • Low acres (same this year)

Increased demand from Europe due to poor production (not the same this year)

Spot Brown prices have changed very little in the last month, but oriental levels remain firm due to very high nearby demand.

Happy Halloween, 

Walter

August 20, 2015

Spot markets for mustard in Canada continue to see near term firm price levels due to very low carryforward stocks and lower than average expected 2015 yields on lower acres (near lowest level in 5 years).  Spot price levels for yellow are being contained due to:

  • the lack of demand from Europe where inventory levels are high and new crop supplies from Russia/Ukraine are more than ample

  • devaluation of Russian/Ukrainian currency

  • expected above average production in USA due to very good 2015 growing conditions in Idaho and North Dakota (harvest starting this week)

  • mustard crop prospects (includes brown and oriental) in Canada have rebounded from a pessimistic outlook in May/June due to better than expected rainfall in July in most mustard growing areas 

  • expected start to harvest this week in southwest Saskatchewan could see downward pressure on spot price depending on grower selling

Spot price levels for brown are up from their low levels last winter/spring and oriental continues to push levels due to very short positions in the near term. 

Long term fundamentals for mustard remain: 

  • continued historic low supply/use ratio through 2016 (10%)

  • difficulty to expand more acres due to canola expansion

  • solid export demand from condiment and flour customers with little impact on volumes if grower price moves up or down

As of 31-August-2015 the farm inventory for all of the 2014 contracted and overage mustard production will have been picked up by Olds Products. We have a solid inventory of cleaned mustard (normal) and we will start to move the new crop after the harvest samples arrive at our office in Pleasant Prairie. Despite the lower than average yields this year due to early season frost (reduced plant populations), drought and high heat, mustard growers are pleased with the resiliency of their mustard crop this year. Other observations this year:

  • with July rains the pods filled well and seed size is expected to be on the large size

  • good branching

  • varied maturity dates in fields due to effects of hail and lack of rain and frost 

Please let me know if you have any questions. Harvest sample bags along with instructions have been mailed and we look forward to receiving your representative samples. Thank you.

Regards,

Walter

July 8, 2015

Spot markets for all mustard types have moved higher in June due to a lack of spring moisture and the above average heat in a large part of the mustard growing area of Canada. The best growing conditions for mustard are in North Dakota where it is the best in many years after being drowned out or nearly drowned out the past 5 years.  This year they have received more than sufficient rain (5” plus) and the temperatures have been on the cooler side. In Canada the situation changes to from 2-3” (1 inch was received this past weekend in S. AB and S.SK and will go a long way to filling pods-very timely) since seeding in the southern areas of Alberta and Saskatchewan to virtually no rain north of the #1 highway in western Saskatchewan and Alberta.  The lack of moisture has been coupled with extreme heat - over 30 C for many days - and this has brought out early flowering as the plants abort growth. Mustard yields in Canada were reduced  with the repeated frost events in early May that killed some of the plants, and now they have been further hurt by the events in June. The best prospects for average yield in Canada are now 600-700 lb/acre for yellow (range 400 lb/acre to 1000 lb/acre) and 700-800 lb/acre for brown/oriental which, overall, is not bad considering.

Sub-soil moisture was rated good this spring (if the mustard’s tap roots are deeper to retrieve moisture the prospects improve) but the intense heat (several days were 34 C) for much of June was too much for the plants to push higher or to add flowers. This year the mustard grown in Canada will be shorter, will have different maturity dates caused by the frost and the density of plants will be on the thin side. It is interesting to note that yellow mustard will fill that “thin” space with the right moisture at the right time by branching out and looking more like a bush. Amazing.

As expected the spot market offers from growers have moved higher in June. Acreage estimates for mustard in Canada were 325,000 in 2015. That would be the lowest since 2006. USA acres (all yellow in ND, MT, ID and WA) are up to 50,000 acres after dropping the past 5 years. 2014 carryforward stocks on farms are low and the pressure on prices to keep from falling from current levels will continue through this year.

Mustard production in Eastern Europe is moving along well this year and the carryforward stocks there are more than adequate. Unless a major catastrophe hits the mustard growing areas in Ukraine and Russia it appears additional demand for 2015 Canadian yellow will not come from Western Europe (Germany).

I believe Canada should be able to scrape through and export the normal demand, 10,000 MT/month, if mustard suppliers (dealers) have a normal 3-6 month supply going into the next crop year that starts in August.

Despite the rise in spot prices in Canada the currency exchange (currently 1USD=1.28 CDN) has allowed Canadian mustard to remain competitive in our normal export markets but that may be tested if our supply situation worsens - at this point the only danger to more yield loss is hail - and spot prices rise dramatically. Most growers in Canada/USA will be harvesting in mid-August and I plan to do a crop tour before then. I look forward to passing along my observations. Please pass along your comments as well- they are appreciated.

Regards,

Walter

Note: A mustard plot tour is planned at the Ag Canada station in Swift Current, SK on 16-July. Please RSVP by tomorrow. Details can be found at http://www.saskmustard.ca/grower/index.html 

April 30, 2015

The 2015 certified (Andante and Centennial) planting seed was delivered to Olds Products contract growers in Alberta (AB), Saskatchewan (SK), Montana and North Dakota by mid-April and it only took a few days before the seeding began in southwestern Saskatchewan. The weather has been cooperative for soil preparation and seeding in many areas over the last few weeks and approximately 10% of our contracted acres are seeded.  If weather conditions hold we could see that number go over 50 % complete by the end of next week (Alberta, Montana, North Dakota and south Saskatchewan are big contributors) and that would be 2 weeks ahead of the 5 year average and 4 weeks ahead of last year. Mustard has always shown better yields when seeded early or within the 5 year average (complete by 3rd week of May). Central Saskatchewan and Eastern Saskatchewan will start to seed in the next 1-2 weeks due to cooler and wet weather.  Despite the lack of snow in most of the mustard growing areas this past winter both topsoil and subsoil moisture conditions are rated mostly good.

Pick up of Olds Products 2014 contracted mustard is now almost complete and the remainder to pick up will move in the next month or two. Spot price bids have been firming in the last few months.

Spot prices are expected to hold firm in the next month or two given the 2015 forecast of only 320,000 mustard acres (465,000-2014) by Statistics Canada and 43,000 acres (35,000-2014) in the USA by USDA.  I was expecting mustard acres in Canada at approximately 400,000 and I was quite surprised to see the lower number in the April estimate, but it is early (spot growers could change their mind) and the risk of sampling error is higher for mustard than for a crop like canola.  I understand that certified seed sales from all suppliers were brisk this year and the country is now sold out.

Best regards.

Regards,

Walter

February 17, 2015

2015 mustard contracting with Olds Products growers continued this week with good progress made in all mustard growing areas.  We expect to have virtually all of the same growers as in 2014.  New this year, the contracts will be emailed to each of you with easy to follow instructions for returning by email.  Despite the slight drop in the contract price - with a higher drop in USA - from 2014 the response has been positive due to a better outlook for 2015.  In February, 2014 the snow cover was deep and widespread and temperatures were very cold leading to an outlook for a late start to the seeding season after the expected spring melt. 

Mustard movement off farms has continued to be good in January and will continue through the crop year for Olds Products growers.  We plan to buy the excess production (over the contracted amount) from our contracted growers in the next few months for pick up this summer.

Spot prices for yellow mustard have moved higher from my last report in January.  Unlike yellow, brown and oriental spot pricing have changed little since January.  The fundamentals remain the same for all three types: continued strong demand for virtually all of the 2014 production, and only 1-2 months’ supply carry forward (low stocks/use ratio of approximately 10% expected at 31-Jul-2015 for Canada). Brown pricing is the lowest of the mustards and this is mainly due to more spot sellers lining up than spot buyers so far.  The brown mustard production (mostly Saskatchewan) was just over 45,000 MT in 2014, same as 2013, and the annual demand from Europe/USA/Canada is about 40,000 MT.

At this time last year it became evident that Canada would seed more acres of mustard than was initially predicted due to slow movement of most commodities and their price implosion.  Mustard prices were holding up due to a very low stocks/use ratio which enticed past growers from a few years earlier ventured back to growing mustard.  The result was close to a 20% increase, or 500,000 acres, for 2014. This year the swing is moving in the other direction.  Fewer mustard acres are expected, likely just above 400,000 acres which is almost a minimum for mustard.  We will need an above average yield (over 750 lb/acre) to add to the 2014 stock/use ratio at 31-Jul-2015.

Mustard acres in the USA are likely going to take another drop in 2015 due to the currency exchange (lower CDN) and increased canola acres in North Dakota.

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

Regards,

Walter

 

January 13, 2015

Happy New year! It has been a pleasure working with each of you this past year and I look forward to doing the same in 2015. As mentioned in my December report, Olds Products will be looking for roughly the same contract acres in 2015 as in 2014. Due to above average yields in 2013 and the subsequent purchase of the contract over-production last summer we will be processing the last of the 2013 crop this month. The 2014 crop (contracted and over production) will be processed entirely by us in 2015 and then this upcoming year’s crop in 2016.

Despite the higher yielding 2013 crop we have had good movement on the 2014 contract crop from farms to our cleaning facility in Drayton, ND thus far and that will continue through 31-July-2015. Also, we plan to have our 2015 contract prices out soon after this week.

I will be presenting the market report for the SMDC annual meeting in Saskatoon this Thursday and my presentation will include:

The spot market:

  • Brown – With a higher carry-in plus increase in spot acres from growers in 2014 due to canola price drop, brown seed is adjusting to higher selling pressure ex-farms post-harvest.  The result is lower spot prices than 2014 contract levels for brown.
  • Yellow – Spot Yellow prices are holding up relatively close to contract levels.  Farm stocks were very close to being sold out at 31-August-2014.
  • Oriental – Spot prices are holding firm despite almost doubling of acres from 2013

Mustard Fundamentals:

  • 2015 Crop demand from USA (Yellow, Brown and Oriental-total 60,000 MT), Europe (Brown- 30,000 MT), Japan/Asia (Oriental 10,000 MT) and Other (20,000 MT) will continue. Total 120,000 MT.
  • 2015 Crop Demand includes wet (condiment – 70%) and dry processing needs (flour and ground-30%) for 2016
  • Mustard is an ingredient for which there is no substitute for virtually all uses and in most cases price does not affect the volume used
  • Barriers – allergen in Europe and Canada; GMO concerns in Europe
  • Despite high reported acres in Canada the percentage of stocks/use at 31-Jul-2015 is 13.8% (roughly two months’ supply not including dealer inventory in USA)
  • Production contract interest for buyers and sellers will be strong due to lower prices (but relatively strong compared to other commodities) and currency exchange (15%-17% advantage for CDN grower)

Regards,

Walter