High Level Take: It’s a stock rebuilding year. Even with poor Canada yield (i) acreage is high, (ii) prices have been extremely high for 2 years creating solution-ingenuity that at the margin includes digging deep into Eastern Europe or Black Sea for supply, possibly even with a splash of guar gum substitution in meat binder. Hefty early contracting, even if 2023 yields didn’t meet Act of God threshold, creates sufficient market ready. Toss in some global importer affordability woes, specifically how it is bought, amid statistical awareness that Canada demand only averages 12,000t a month, can’t see anyone being surprised, fooled or unprepared by tightness this year. As such, mustard price cycle has likely peaked, for all types.
Unless the commodity is directly involved with grain and oilseed demand bull conditions, it’s tough for other smaller commodities like mustard to indirectly and proactively adjust behavior. This is particularly true with mustard because of consumptive adversity due to less outdoor eating. The world still needs about 10,000t a month from Canada for export purposes and 5,000t a month for domestic use. With strong competing crop prices, it is not a foregone conclusion that Canadian mustard seeded acreage jumps in a meaningful way. What happens if people get vaccinated and start to become more socially active again into 2022?
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