Quality concerns are the greatest in the growing regions of southern Manitoba and southern Saskatchewan. WCE flaxseed prices have been reflecting these issues since late August. Since early August nearby WCE flaxseed futures prices have increased from about $212 per tonne to over $237 per tonne, a rise of over $25 per tonne.
European interest is also thought to be underpinning the Nov 00 flaxseed contract. Traditionally, Europe purchases supplies from Canada in early fall, for shipment through Thunder Bay in late fall. Trade sources said the recent buying interest, along with firmer prices, are expected to last for possibly another month as many Canadian farmers remain holders of flaxseed supplies.
The Nov 00 canola/flaxseed spread narrowed over the past month on what market participants are attributing to typical fall export demand for flaxseed. The Nov 00 flaxseed contract ended the month at a discount of only $23.30 per tonne to the Nov 00 canola contract. The Nov 00 canola/flaxseed spread has not seen such low levels since July 1999. Trade sources say this is primarily a reflection of supply and demand.
During the spring of 2000, when planting decisions were being made, the Nov 00 canola/flaxseed spread was in excess of $40 per tonne. During the growing season the spread ranged between $30 and $40 per tonne before the recent decline.
Some trade sources are anticipating lower flaxseed production estimates in the next Statistics Canada Production Report, which will be released October 6, 2000.
