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Since 1897, Olds Products, Leaders in MustardFitzpatrick Bros.

2016 Crop Reports

November 4, 2016

The completion of the 2016 mustard harvest continues to drag on for approximately 20% of the growers in Alberta and Saskatchewan as they await a drier and warmer weather trend (maybe this week?). Olds Products has several mustard growers in Saskatchewan and Alberta that have their mustard remaining in the field. In all cases the mustard is ripe – quality is good – and growers are waiting for seed moisture levels to come down to more manageable levels. 9.5% is considered dry for mustard but levels under 13% at harvest can be managed with good storage practices (i.e aeration bins) including bin rotation. I have heard that several growers in Canada have experienced the expensive lesson this year of how quickly mustard can deteriorate (heating) during storage. It should be noted that wet and dry mustard will blend to some extent in storage but it should never be assumed they will average down evenly – if at all.

Spot growers who harvested their mustard but did not have a production contract are receiving bids for all types (yellow, brown and oriental) below price levels not seen in the last five years. The lower bids are direct response to the current imbalance that has a higher level of spot supply looking for a bid than spot demand looking for an offer. Typically this time of the year there can be significant buyer interest from the spot market but after last year, when spot prices soared, more buyers changed their practice and bought earlier and committed to the contract market. The wild card this year will be demand for yellow mustard in Europe (not normally sourced from Canada) but perhaps at the lower prices there may be wiggle room to expand our exports. Russia and the Ukraine have good supplies of good quality yellow mustard and likely will not give up their market share easily.  

In my two previous mustard market reports (May and August 2016) I noted how spot mustard acresin Canada, in my opinion, unexpectedly surged in May in response to the high spot prices at the time. Prior to last May, new crop grower interest was more focused towards lentils and, as a result, I was expecting very little increase in new crop acres for mustard in Canada over the previous year (350,000 acres for all types in 2015).  The industry numbers (Ag Canada, Sask Ag and Stat Canada) agree that Canada not only grew over 500,000 acres of mustard in 2016 but also at a possible record average yield of over 20 bu/acre (1000 lbs) for yellow and 24 bu/acre (1200 lbs) for brown/oriental. (I am much less certain on the acres.) In the USA, Montana and North Dakota, there were higher losses due to hail but yellow yields should still average close to 900 lb/acre. This is also above the 5 year average. Our highest grower yields for 2016 were in Alberta where a few yellow growers produced over 1500 lb/acre.

Using the above industry acres and the actual average yields it is not difficult to predict that a significant carryforward of 2016 crop at July 31, 2017 will exist compared to the previous two years.  Depending on actual exports the number could be anywhere from 3-5 months usage (10,000 MT/month).  This is not a large burden by any stretch when compared to higher levels seen in the past 20 years. (There was over a 12 month carryforward in 2004 and 2005.) It should be noted that mustard, especially yellow, has always been considered a highly yield variable crop from one year to the next. History tells us that carryforwards can be large one year and disappear within the next two. The 2016 carryforward will no doubt influence 2017 grower pricing and the level of spot acres but to what extent remains to be seen. For Olds Products we will remain committed to the same growers as in 2016.  We understand that you cannot blow off acres one year and try to get them back the following year without a rare fluke such as a late season acre rally like we saw this year. As well, Olds Products will be committed (as we have in previous years) to buying all additional production (overproduction- grower willing) from its contract growers before the 2017 harvest.             

2016 contract yellow mustard movement off farms has been very steady since September for Olds Products. Approximately 30% of total production has been picked up off farm. Inventory levels of cleaned 2015 yellow in North America were run to zero in October by end use processors.  Since then the entire industry has been using 2016 yellow mustard for all wet and dry mustard processing.  This is much earlier than normal.

2016 contracted brown mustard movement for Olds Products off of farms will begin in November, but stocks of 2015 cleaned brown mustard will continue to be processed at least through December at our processing facility in Pleasant Prairie, WI. 

Thank you,

Walter Dyck

 

August 8, 2016

I completed my mustard crop tour/inspection in July and after driving almost 4,000 miles (that’s like driving from Prince Rupert, BC to Key West, FL!) through our mustard contracting area in ND, MT, AB and SK I was very pleased with the crops’ progress and potential. Aside from some hail damage to a small percentage of growers (5%) the mustard fields were mostly through, or just at the end of, the flowering stage. The Olds Products contracted mustard fields:

  • looked clean – effective herbicide control
  • above average yield potential based on a high germination rate, larger than average pod zone on each plant, and above average seeds per pod (6-8)

The higher yield potential this year (1,000 plus lbs/acre) was achieved largely  by above average rain amounts during the flowering stage in July (5-8 inches in Canada) throughout the mustard growing areas. Receiving that amount of rain in July in those areas is extremely rare and, combined with above average May/June rainfall, the mustard is set up for excellent potential this year.

Rain and storms continue to make the news on the western prairies of Canada this week after some soaking yesterday in AB/SK. Growers are now hoping for dry weather as they prepare for harvest but August forecasts for the CDN prairies are cooler and wetter than normal. The first of our contracted mustard was harvested in North Dakota last week, and next week more will continue. In Canada it will be at least a few more weeks before the combines are started on the wet fields.

During my mustard tour in July I did not see evidence of the increased mustard acres (2016 - 515,000 acres, 2015 - 375,000 acres) in Canada but in talking to some of the growers in southwest Saskatchewan at least some of the increase may be there. Many of the increased mustard acres in Canada were last minute seeding decisions and:

  • planted on fields that previously grew canola as the oilseed in the farm rotation (quality concerns)
  • grown to fill storage bins that will only be sold when the spot price is near or at record highs- regardless of the time to get there

As mentioned in my last report USA yellow acres also increased significantly from 2015 (2016 - 60,000 acres, 2015 - 45,000 acres) and these acres were all contracted prior to seeding (no last minute seeding decisions). Yields there (MT and ND) are also expected to be 1,000 plus lbs/acre.

Spot mustard bids in Canada appear to be down sharply in anticipation of a much larger harvest than in 2015, but it should be noted that the mustard is not in growers’ bins yet. Yellow mustard buyers will need new crop supply in September to meet zero inventory levels and this will largely come from their contracted mustard supply. Growers who grew without a contract and are searching for a bid in August will find levels much lower than 2016 contracted levels. If current yield potential of 1,000 + lbs/acre is realized (highest average yield) then the supply of mustard will stretch into early 2018.  This is not that unusual, but none-the-less quite surprising given the outlook in March.

In preparing for harvest it should be noted that the USA now has an established Mximum Residue Limit (MRL) of 40 ppm for glyphosate on yellow mustard. Growers considering using a pre-harvest desiccant (rarely used for mustard) should still check the product label for proper registration and application.

I have mailed the USA grower harvest sample bags(s) and next week will mail the sample bag(s) to our Canadian growers along with the instructions for sending the representative harvest sample. Thank you.

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

Regards,

Walter

July 5. 2016

The 2016 Mustard crop is now in full bloom (some areas near the end and some just beginning the 3-4 week bloom period) and the progress through June has been very good with timely rains throughout the mustard growing area of Alberta, Saskatchewan, North Dakota and Montana. The biggest concern among growers, when crops look this good, are storms that produce hail, but at this time damage has been limited to a small percentage of the fields.

Statistics Canada and the USDA provided their forecast for 2016 mustard acres last week and the results surprised many in the industry, including myself. The forecast for Canada is up over 10% from earlier industry predictions to 525,000 acres, compared to 350,000 acres in 2015, and the USA is reporting 60,000 acres seeded to mustard in 2016, compared to 45,000 in 2015.  Most of the seeded acre increase in Canada is Yellow and Oriental and in the USA it is virtually all Yellow Mustard. 2016 contract prices for Yellow and Oriental were comparatively strong against most crops except lentils, and that, combined with very strong spot prices earlier in 2016, attracted more acres than previously predicted. Many of the spot growers who sold Yellow (at the highest levels since 2008) earlier this year may now be replenishing their empty bins and growing mustard again – and then locking up again.

The result of the favorable growing conditions and the increased acres seeded to mustard have reduced spot price offerings for new crop to similar levels as 2016 grower contract prices (any old crop is sold out).  If mustard yields hold up to current, above-average yield estimates then, for the first time this year, there is potential for crop carryforward supply to 2018.  (The 2016 crop was expected to supply customers through most of 2017…barely). The carryforward, if any, will be smallest for Brown mustard (60,000 acres) due to the 20% decrease in acres from 2015. Oriental acres surged by almost 100% from 2015 to 100,000 acres and Yellow acres are up 40% to 360,000 acres in Canada, the highest since 2009.

I will do my 2016 mustard acre touring/inspections starting next week and then report with yield estimates. In early August I will mail grower sample bags along with sample return information. Please let me know if you have any questions.

May 15, 2016

Contract growers for Olds Products received their certified Andante (yellow) or Centennial (brown) seed in the first half of April and seeding in all mustard growing areas (S. AB, SW SK, NW ND, SW ND and NE MT) for Olds Products  has seen very good progress since then (over 50% complete). Last week the weather was warm (in fact some days were unusually hot for early May) and dry after receiving anywhere from a ½ inch to more than 1 inch of rain in the previous week in most of our growing areas. Prior to receiving the rain last week many growers in MT, AB and SK were concerned with the lack of topsoil moisture which is needed for effective germination, but those concerns have been calmed for the time being with the recent rains.

In our ND growing areas the soil moisture conditions are excellent and growers are there are hoping for some dry weather so they can proceed with their seeding. This week will see more rain/snow hit the growing areas (large amounts are not forecast) and the temperatures will be cooler as seeding takes a bit of a break. Some areas will receive temperatures below freezing this week and that is always a concern when plants have emerged from the ground. Mustard has proven to have very good  tolerance to Spring frost over the years and a year ago was no exception as much of the growing areas had significant frost events- but no re-seeding was necessary.  

Mustard crop fundamentals remain and are:

  • Almost no farm inventory of yellow, brown or oriental mustard at 31-May-2016
  • Dealer/processer old crop inventories will be drawing down to zero by October/November 2016 (or earlier)
  • 2016 total mustard acres in Canada and USA are higher than last year by 25% (mostly in Canada) but the 450,000 acres will provide very little in carry-forward supply to 2018
  • Spot prices (bid levels) have decreased to 2016 contract price levels 

The El Nino weather pattern is expected to weaken in the next few months and the outlook is for dry conditions in the AB and SK through June which will not help yields. On the positive side the sub soil moisture reserves are rated good throughout our mustard growing areas. Mustard can be very effective at harnessing deep moisture reserves with its tap root provided the most intense summer heat comes after the flowering stage.

I plan to report again after the 2016 seeding is complete (2-3 weeks). Please provide me with a quick text or email with the progress of your mustard and the conditions when suitable for you. Thank you!

Walter Dyck

February 19, 2016

2016 mustard acre contracting for Olds Products continues with growers in Alberta, Saskatchewan, North Dakota and Montana. Progress has been good and virtually all contracting goals (almost 35% higher for yellow over 2015) for 2016 have been met at this time with the exception of a small amount of brown acres and some organic yellow. Our inventory levels for cleaned yellow mustard are expected to be empty late in October this year and new crop deliveries will be steady as we replenish our inventory. The 2015 contracted mustard pick-ups for Olds Products continues at a very good clip due to the mild and snow-lite winter – there has been very little plowing necessary to get at bins.

Ag Canada is predicting   just over 400,000 acres for mustard in Canada (some industry insiders are predicting 450,000 acres) which will be up by 25% over 2014. If yields are average (750 lb/acre) then look for a slight build in carry-forward stocks – possibly a 1-2 month export build (10,000 MT/month) at the farm level at 31-July-2017. 

Spot market prices for yellow mustard continue to see heights not seen since 2008.  Contract interest for Olds Products has been strong in Alberta and North Dakota/Montana. In Saskatchewan the interest appears more towards growing yellow mustard without a production contract. 

There may be a resurgence in Manitoba mustard acres due to the higher prices, new larger mustard varieties (Andante) and the use of color sorters. Manitoba was a large force in mustard production in the 70’s and 80’s but faded in the 90’s due to low grades on account of wild mustard. Today if black seeds such as wild mustard are a grading issue in yellow mustard they can be removed with a color sorter.

Due to the expected record low farm inventory of yellow mustard at 31-July-2016 it can be expected to be a volatile period for spot prices through harvest. Spot prices will move up and down in this time period depending on the latest news regarding expected vs. actual yellow mustard acres seeded in Canada (possibly 325,000 acres in 2016 compared to 225,000 in 2015), the USA (possibly 50,000 acres compared to 44,000 in 2015) and the growing prospects influenced by rainfall etc. 

Spot prices for brown mustard remain steady due mainly to declining demand from Europe. Eastern Europe and France are producing more brown mustard than in many years and this takes the pressure off Canada which for the last 40 years was really the only shop to buy. The export peak was in 2008/09 when over 40,000 MT was exported from Canada but in 2015/16 there may be only 20,000 MT-25,000 MT shipped to Europe/USA. I do not see this trend changing due to rising confidence in European production of yellow and brown mustard. Despite the drop in our CDN dollar vs the USD the drop has not been nearly as severe against the euro. Also, Russian and Ukrainian currencies have sunk far more than the CDN dollar from their highs before the civil war in the Ukraine. Production and interest from growers for new crop brown has been spotty at best due more interest in growing without a contract in Saskatchewan – due to the lower price when compared to yellow plus the current and forecasted dry conditions through Spring in southern parts of Saskatchewan and Alberta. I expect 5,000 acres in Alberta and 60,000 acres in Saskatchewan for 2016- down slightly from 2015.

Oriental mustard continues with its bullish ways this year as dealers and processors try to move inventory levels higher. There is no doubt that end use demand is up slightly in last two years but the biggest reason for the higher prices is the slide in the seeded oriental acres in the last 10 years due to the lack of attention from contracting and end use companies. Gone are the days when you could count on oriental supply from the spot market at relatively cheap levels despite good yields in 2015 and increased acres. At these levels some growers are shifting to oriental in 2016 from yellow. I expect 60,000 acres of oriental will be grown in Saskatchewan – about the same as 2015.

The big wildcard when estimating new crop mustard acres is the interest (either added or reduced) that can come in the few weeks before seeding. The lack of certified planting seed in both Canada and USA will certainly curtail more acres if there is added grower interest this Spring. 

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

Thank you.

Walter Dyck