Winnipeg Commodity Exchange Flaxseed Futures Open Interest Rises As New Crop Approaches

Flaxseed open interest rose from a low of 1,650 contracts in June 1999 and climbed as high as 7,421 contracts in April 2000. This increase has brought flaxseed open interest back into its normal historical range, though still below the highs of early 1998. The 1999/00 crop year-to-date average daily trading volume for flaxseed is 476 contracts compared to 465 contracts for the 1998/99 crop year. Flaxseed options volume crop year-to-date has also increased significantly over the previous crop year.

Over the past year and a half flaxseed prices have declined dramatically reflecting increased Canadian and European production. However, in recent months flaxseed prices have broken the prevailing downward trend. The nearby flaxseed price series ended the month at $238.20/tonne up from a low of $211.10/tonne set on January 3, 2000.

The Statistics Canada Seeding Intentions Report, released April 20th, estimated that flaxseed acres would be down 35% from the previous crop year. A recent report from Oilworld also indicates that European plantings are down significantly. However, the 2000/01 crop year will be starting with a large carryover of stocks, with the July/Nov spread reflecting that there are ample supplies of flax.

The July/Nov 2000 flaxseed spread has been trading with carry, ending the month at $7.50/tonne. Full carry is estimated at $12.70/tonne, which means the July/Nov spread is trading at approximately 60% of full carry. The 1999 July/Nov spread traded at a relatively small inverse in contrast to the large inverse observed in 1998 July/Nov spread.