Mustard seed price rises, sharply

(Resource News International) — The price of Canadian mustard rose
significantly over the past few weeks as a result of lower
production in both Canada and Europe, according to a federal special crops analyst.

According to Agriculture and Agri-Food Canada, mustard
ending stocks are estimated at 20,000 tonnes. This was
revised downward from earlier estimates in mid-September of
45,000. Accordingly, prices per metric tonne currently range
from $590 to $620, up significantly from earlier price
estimates of $460 to $490.

Stan Skrypetz, AAFC’s pulse and special crops analyst in Winnipeg, said three factors are contributing to
current high prices.

“There is a very tight market for a number of reasons.
First, Canadian production fell and is much lower than was
previously anticipated. The second reason is that European
production declined. The third factor is that a lot of what
has been produced in Canada is under contract, so that means
there is a small amount on the free market. A good chunk of it
is contracted, so not a lot is free to be sold in the spot
market.

“The highest prices right now are for yellow mustard and
the market for that is basically in Canada and North America,
although the Europeans will sometimes buy yellow mustard if
they are short. The market for brown mustard is mostly North
America and Europe, countries such as Canada, the U.S., France,
Belgium and Germany. Oriental is a different situation. A lot
of it goes into the Asian markets and the eastern European
market,” Skrypetz said.

Walter Dyck, manager of mustard seed dealer and processor
Demeter Agro in Alberta, said he doesn’t believe the current
price of mustard will significantly impact the amount of
mustard Canada is able to export.

“We’ve got high commodity prices and we’ve got a much
stronger Canadian dollar, which makes our exports more
expensive. Those things combined, I believe, will bring in
more competition from other countries but Canada has a very
significant share of the export market for mustard, somewhere
between 80 and 85 per cent, so I don’t expect a big drop in that number.”

Elwood Lawrence, a consultant with The Mustard Bin in
Regina, believes, however, that purchasers of Canadian
mustard will display more caution than in 2002 when prices
rose to 70 cents per pound.

“In 2002 when Europe had the total crop failure, they
came in with an open chequebook and paid whatever it took.
They over-booked, however, and then tried to put the mustard
back into the market, but at those high prices no one wanted it
because they overpaid to begin with.”

“I think that there will be more caution displayed here
now possibly as a result of the 2002 learning curve. I don’t
think that they’re going to be as aggressive. They’re not
climbing the walls the way they were five years ago.”

Dyck said Canada may see more mustard acreage next year
as a result of the high prices.

“In this case I do think that we’ll see an increase in
mustard acreage for 2008 but it’s a matter of how much.
Contract prices rose in 2007 from 2006 but we still saw the
second or third lowest number of mustard acres in 20 years. I’d like to think that there will be more acres but
another factor you have to look at are the values of other
commodities such as canola, wheat and barley.

“If there is a
perception that those prices will be high it will take away
some of the shine from mustard.”