If all you read about the flax market came from the farm papers this year, you’d be seriously questioning the price trend since last fall. From recent highs of $9.50/bu in September 2009 (pre-harvest bids were higher), right before the news hit about the GMO/Triffid issue, the market immediately went to ‘no bid’ or $6-6.50/bu. It quickly recovered to $7-7.50/bu by late fall, and since January has been trading at $8.50-$9/bu (basis southern Manitoba with top-end pricing representing select edible markets).
In other words, prices have almost completely recovered despite having lost a market that typically represented 75% of export demand for Canadian-origin flax. The slack was picked up by very strong Chinese buying. Total export projections for 2009/10 continue to be revised higher, and the carryout lower, lending short and mid-term support to the markets.
Longer-term, the big question of whether or not China will continue to buy at this pace is not one that we can call any better for flax than any of the other many crop markets that they are an important player in. But we can identify the two variables that will impact their buying decisions the most: the elasticity (price-sensitivity) of their demand, and flax’s price relative to canola.