(Resource News International) — Mustard prices in Western Canada have held reasonably steady over the past month, but could be poised to climb higher given the adverse growing conditions in prime mustard-growing regions of Alberta and Saskatchewan.
“We’re in quite a dilemma because of the lateness and the dryness of the crop,” said Gordon Crone manager of procurement and logistics with Mustard Capital Inc. at Gravelbourg, Sask., about 120 km southwest of Moose Jaw.
Crone noted that the mustard crop would normally be flowering by this time of year, but is only just coming out of the ground in many cases.
While most of the mustard he was buying was contracted from areas that have seen some rain, Crone said the dry conditions were hitting some of the major mustard-growing areas of Alberta and Saskatchewan and will limit available supplies on the market next year if conditions don’t improve soon.
“As a buyer you don’t want to say it, but I can see the price probably going up,” said Crone. Part of the lack of movement in prices currently was due to the fact that none of the end-users want to be the first ones out there with higher prices, he said.
Many end-users didn’t want to contract in the spring, because they thought prices were going down, said Crone. However, with crop problems developing some buyers are trying to contract now, although at prices that may not be that attractive to farmers.
Crone thought new-crop prices for yellow mustard would have to be in the 38- to 40-cent per pound area as an absolute minimum, because that’s where contract prices were earlier this spring. However, he also expected producers with uncontracted mustard would likely hold out for higher prices.
“Supplies are tight right now, and they’ll get tighter,” said Crone. With tight supplies likely to send prices higher, he said there could now be a concern that mustard would price itself out of the market and cause some end-users to switch to alternatives.
Contributing to some of the concerns in the mustard market was the fact that acres are still somewhat unknown. Usually two-thirds of the mustard is contracted, but this year only about a third was contracted, according to Crone. As a result, it’s a little harder to get a handle on how many acres actually went in the ground. He expected acres would likely be in line with historical averages.
In 2008-09 farmers in Alberta and Saskatchewan planted 550,000 acres of mustard, according to Statistics Canada. Early estimates are for a 480,000-acre crop in 2009-10, although there will likely be revisions to that number in the June 23 acreage report.