Recently, I read in a weekly farm paper that the mustard market is quiet at the grower level in Saskatchewan due to light selling in the spot market. For the past 40 years Saskatchewan was the largest mustard supplier and it is there, to a large degree, where the spot price is set and where most of the spot growers in North America are. Although, Alberta and the USA (North Dakota, Montana, Idaho, Washington and Oregon) each grew the same amount of yellow mustard in 2020 as Saskatchewan, spot selling there is mainly connected to the overage portion in production contracts and occurs after the contracted portion is filled later in the contract shipping period. There are a number of reasons for the current light spot selling and these could all be true or some partly, depending on the grower. The reasons are:
- Growers in Saskatchewan planted the fewest number of acres in 2020 and recorded the lowest production in 20 years
- Ratio of contract growers to spot growers in Saskatchewan is higher in 2020
- Yields were only average through the province and mustard growers are looking for a better bid in order to breakeven in their mustard profit/loss
- Farm cash flow is positive. Spot mustard prices for yellow and brown are near three year highs but compared to the price increases in other commodities such as flax, barley, soybeans and canola the story for spot mustard prices has not been as exciting
- Export grain shipping from Saskatchewan has been at record levels in 2020 and this translates to higher farm incomes. Growers will hold back some farm stocks, then wait for a higher bid, and defer income to 2021.
Another recent observation of the mustard market is Canadian export levels for the 2020 crop year are down nearly 10% from 2019 and 20% down from 2018 to a projected 110,000 MT- lowest in 20 years. Regardless of the amount of acres grown in Canada since 1984 the annual export volume was rarely below 125,000 MT. The changes/trends are:
- Growers in Eastern Europe are growing more consistent volumes of good quality yellow and brown mustard for the German and Dijon market respectively.
- USA is again growing a larger share of the yellow market and thus requiring fewer imports from Canada. From 1984 (approx.) to 1997 the USA grew a much smaller amount of yellow mustard than it imported from Canada. A few reasons for the pendulum swing in acres between Canada and the USA over the years was currency exchange, new certified mustard varieties and advances in crop technology.
Going forward new trends will develop but the reality for Olds Products is we require mustard production from contract growers in Canada and USA every year. Our requirements are increasing for all three mustard types and organic. In our view, in order to meet those future requirements and to be sustainable, mustard must be grown every year in an annual rotation by our scale contract growers in Canada/USA. Olds Products will always strive for this goal. This past summer we sent a mustard gift pack to growers along with a letter of appreciation with the number of years each has grown for Olds Products. 2021 will #13 for many growers. Thank you to all past growers for contributing greatly to the success, not the least of which is not running out.
Olds Products looks forward to a continued committed relationship with current growers, and we welcome new inquiries from experienced mustard growers. Our 2021 contract program will be sent to past growers in mid-January and together with our mustard contractors, Bart and Peter and the staff at Olds Products we all look forward to working with you in 2021 and beyond.
Please let me know if you have any questions or comments.
Merry Christmas and Happy New Year!