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Flax Market Outlook 2011 and Beyond. Presented by: Chuck Penner. Jan 2011. Canadian Situation Setting the stage Remainder of 2010/11 2011/12 Outlook Acreage/Production Price Ideas Beyond 2011/12. Outline. Lowest production since 1992. Carry-in decent size, but quality is a question.
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Flax Market Outlook 2011 and Beyond Presented by: Chuck Penner Jan 2011
Canadian Situation • Setting the stage • Remainder of 2010/11 • 2011/12 Outlook • Acreage/Production • Price Ideas • Beyond 2011/12 Outline
Bullish factors • Extremely tight supplies • Decent demand is continuing from Europe (Triffid protocol working) • Solid price-inelastic demand from Omega-3 feeders • Feed prices in Europe still rallying to help linseed meal values • Bearish factors • Larger crop in USA • China mostly priced out of the market • Substitution occurring at higher prices • Oil users and feed compounders in Europe • Fearless prediction • Prices mostly steady through Jan/Feb • Modest upside potential to fill spring vessels, but don’t expect a big surge unless petroleum markets take off Rest of 2010/11
Bullish factors • Low supplies expected to continue • Seeded area in Canada possibly limited by seed supplies • Bearish factors • Some recovery of acres (if everything gets planted) • Gross margins (with $12 NC bids) look good against other crops • Acres also expected up in USA and UK • Competition in EU from Russia and Ukraine? • Fearless prediction • Tight supplies will support prices • $12.00-14.00 if acres get planted, but no room for weather problems What to watch in 2011
Ride the environmental wave • In 2009, bamboo had 5% of $1.6 billion wood flooring market in US • As of Dec 2009, ~ $80 million, growing at 5% per year • Resilient flooring market in US is $2.5 billion • We grow flax/sunflowers/soybeans • Ship the seed to US and bring back the oil • What’s wrong with this picture? • Need a push for North American market • Crush and manufacture here? Domestic Manufacturing
Production from other countries • Ukraine & Russia • Downside of high prices • Demand isn’t completely price inelastic / petroleum substitution • Could cause permanent erosion of demand (Japan) • Environmental benefit • Need a continued push in North America for flooring and other uses • Health benefit of seed • Human consumption and as livestock feed • More potential with inelastic demand • Understand and promote value of meal to increase crush value Longer term issues
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