Canada: Large supply likely to pressure mustard prices

Chuck Penner does not think yellow and oriental mustard will experience their usual spring rallies this year.

The best-case scenario would be flat prices, but they could easily “leak lower” like brown mustard prices tend to do starting in January.

The early outlook for 2024-25 is not good either because of what he anticipates will be excessive supplies of the crop.

“I think prices will remain under pressure going into next year,” the LeftField Commodity Research analyst told growers attending the Saskatchewan Mustard Development Commission’s annual general meeting.

Penner is forecasting supplies of around 275,000 tonnes in 2024-25, which would be the largest in at least a decade.

That is due to a large carryout from the 2023-24 crop caused by the second big harvest in a row combined with a lacklustre export program.

He is forecasting 110,000 tonnes of exports, which would be the smallest program in at least a decade.

“I hate to say it, but it’s frankly because our prices are pretty high,” said Penner.

“It’s making it hard for these buyers to get excited about Canadian mustard.”

Canadian supplies in 2023-24 are close to 240,000 tonnes, which in the past has resulted in prices in the 30 cent per pound range.

He is not forecasting prices plummeting to that level, but he pointed out that growers who used to get excited about 60 cent per lb. mustard are balking at today’s values after watching prices approach $2 per lb. during the drought of 2021.

“It has distorted the thinking, essentially, on the market,” said Penner.

It doesn’t help that there is more competition around the world.

Growers in the United States surprised the mustard market by planting 240,000 acres of the crop in 2023.

They produced 65,000 tonnes of mostly yellow mustard, up 40 percent from the previous year.

That is a concern for Canadian growers because the U.S. is their biggest market for yellow mustard.

The U.S. exported a record 25,000 tonnes of mustard in 2022-23 and is on pace for even higher volumes this year.

Most of that mustard is being shipped to Canada, where it is being re-exported to other markets around the world.

Black Sea acreage was up 10 percent in 2023 and yields were reasonable, but there were quality problems due to harvest rain in Russia and Kazakhstan.

The European Union has been importing a lot of Russian mustard, resulting in plummeting Canadian market share. Russia’s brown mustard is cheaper than Canadian product.

“I’m not giving you great news, am I?” said Penner.

“I figure it’s better to get a heads-up than get smacked upside the head later.”

Yellow and brown mustard still pencil out nicely in Saskatchewan’s brown soil zone this year, with estimated gross margins ranking them in third and fourth spots, respectively, behind only kabuli chickpeas and green lentils.

But he thinks mustard acreage will still decline by 17 percent due to the oversupply situation, with oriental acres falling the most followed by brown mustard.

Growers will likely plant slightly more than 500,000 acres of the crop, which is still a lot of mustard and poses another looming risk for prices.

With average yields, that will produce 160,000 tonnes of the crop, resulting in a bloated 2024-25 supply of around 275,000 tonnes of mustard.

With shrinking U.S. and EU demand, that could prove problematic for prices.

Tags: Kazakhstan, export, EU, prices, United States, Canada, Outlook, crop, demand, yellow mustard, Russia, oriental mustard