WINNIPEG/HAMBURG Dec 22 Demand for Canadian
flax, used in linoleum flooring and health foods, has pushed
prices of the oilseed to one-year highs as Europe shuns Russian
supplies laced with a herbicide made by Dow Chemical Co.
The European Union, the world's second-largest importer of
flax after China, slashed acceptable levels for haloxyfop by 90
percent last June, shifting demand to Canada, where farmers do
not use it.
The limit was lowered due to concerns about safe levels of
the weed-killing chemical in food.
Canada and Russia are the world's two biggest suppliers of
flax, a blue-flowering crop whose seed is used in breads and
that produces oil for paints and linoleum.
"Europe's need to import more Canadian flaxseed has
contributed to increasing prices of flaxseed in the EU in recent
weeks," said Thomas Mielke, chief executive of Hamburg-based
forecaster Oil World.
Canada's good fortune is a reversal from 2009, when it was
mostly locked out of EU trade after genetically-modified flax
showed up in shipments. It also comes as Canadian farmers have
substituted some flax plantings in recent years with more
profitable canola and lentils.
Dow is aware of concerns about haloxyfop in flax and is
trying to find a "pragmatic way forward," with the European
Commission, said spokeswoman Rachelle Schikorra.
"The EU has shown little willingness to consider the impacts
on the trade of bulk agricultural commodities," she said, adding
other companies sell generic versions of haloxyfop.
PRICES ON THE RISE
Western Canadian flax prices range between C$12 and C$13 per
bushel, their highest since 2015, said Canadian analyst Chuck
Penner of LeftField Commodity Research.
Some Russian shipments pass the EU's strict inspection and
currently sell for nearly one-third more than at the beginning
of 2016, a European oilseed broker said.
"We're going to be looking at the effects of this right
through next October, November," said Don Kerr, president of
Flax Council of Canada.
Higher demand has generated more sales for delivery in
spring, when Canada's inland shipping channels reopen, Kerr
Canadian exporters, who include Richardson International and
Glencore Plc unit Viterra Inc, may be
hard-pressed to fill flax demand, however, after farmers
harvested their smallest crop in four years, with mixed quality.
Canada's agriculture department on Wednesday forecast
Canadian 2016-17 flax exports of 600,000 tonnes, down 2 percent
from a year earlier.
Consumers are not likely to notice higher food prices, since
flax makes up a small portion of cost, but industrial linseed
oil users may get pinched if prices stay high well into next
year, said LeftField's Penner.
Canadian farmers are likely to plant more flax in 2017,
partly replenishing global supplies, he said.
China may now buy more Russian flax, since it does not have
the same strict standard, Penner added, while Turkey is already
buying more from Russia at a discount, according to the European
(Additional reporting by Gus Trompiz in Paris, editing by G