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Walter Dyck's Crop Reports

February 26, 2024

The 2024 Olds Products mustard contracting program began in December and finished up later in January. Although, more normal than not, we are very pleased to have virtually every grower return from the previous year. Thank you. Over the 15 years that Olds Products has contracted directly with growers we have been reminded, ever so often, that even with a competitive contract price, contract acres can be lost in key growing areas. 

Canola has been the main recipient of the acres lost, due mainly to increased demand for canola/canola oil in recent years. The amount of canola oil processed in Canada and USA in recent years has doubled and is expected to double again the next five years as more bio-fuel processing facilities are built. Canola growers have long had access to the latest improvements in GMO hybrid seed supply and this has supported the expansion of acres. Until recently mustard had few responses, other than price, to the surge of canola acres into more traditional mustard growing areas (brown soil zone). In recent years, though, growers in both Canada and now USA have access to new hybrid (brown mustard) and composite (yellow) mustard varieties that achieve significantly higher yields while maintaining quality for the mustard industry. Of course, the higher yields are supported best with optimal moisture (4-5 inches of spring and summer rainfall) but since 2020 all but a few small growing areas each year have received “optimal moisture”. Until there is a return of moisture to the mustard growing areas we believe the price has to be more supportive of the higher seed cost. I recently read that the grower costs of production in 2023 were the highest ever and that 2024 will be the second highest. Revenue is not keeping pace with costs for almost all 2024 crops.

For the first time since 2020 we can say there will be carryforward or surplus of mustard in storage at 31-July.  Prior to 2020 it was not unusual to have 4-6 months of mustard in storage either on farm or in buyers bins. The current surplus estimate at 31-July-2024 equates to four months of demand or roughly 40,000 MT. The latest surplus is the product of the doubling of mustard acres (not yield) the last two years after spot prices and contract prices rose to the historic levels in 2021 and 2022. In addition to the surplus of Canadian and USA mustard there is also supply from Russia/Ukraine that is finding its way across the Atlantic.

Initial estimates for 2024 point to another near record year of mustard acres for Canada and USA. Planting seed sales are at a steady pace but well behind the pace of the previous two years. March is the decision month for those growers that have postponed their seeding intentions. On the one hand, a grower will consider, is the very dry soil conditions (bullish). On the other hand is the return of more normal carryforward amount (bearish) of mustard that will delay the return of higher spot prices for at least a year. 

Olds Products will be delivering planting seed to growers starting mid-March in the USA and finishing up in Canada in early April. Please let Greg or myself know if you have any questions or concerns. We will provide a more detailed planting seed delivery update in a few weeks. 

Thank you.

Regards,

Walter

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