Linseed Prices Seen Lower by Oil World on Output at 7-Year High

Linseed or flaxseed prices may extend a decline in the next few months as bigger crops in Canada and Kazakhstan lift world production of the oilseed to the highest in seven years, industry researcher Oil World said.

The global linseed harvest is estimated to climb to 2.33 million metric tons in 2013-14 from 2.01 million tons a year earlier, the Hamburg-based researcher wrote in an e-mailed report today.

Prices for linseed have started falling as the oilseed lost attractiveness compared to rapeseed, the researcher said. Northwest Europe prices for Russian linseed for January or February delivery dropped to $625 a ton as of Jan. 2 from $645 a week earlier and $665 on Dec. 19, according to Oil World.

“There are high chances that the market will transition to a more ample situation in January-July 2014,” Oil World wrote. “We hardly believe that the current linseed price levels will be maintained.”

Canada’s linseed crop is estimated at 712,000 tons from 489,000 tons in 2012-13, while Kazakhstan’s is expected to be 250,000 tons from 158,000 tons a year earlier. Russia’s harvest is estimated to have climbed to 380,000 tons from 362,000 tons, while Chinese output fell to 330,000 tons from 350,000 tons, according to Oil World.

Linseed use is expected to advance at a slower pace than production, with crush climbing to 1.89 million tons from 1.84 million tons, the researcher said. Ending stocks of linseed are forecast to climb to 330,000 tons from 190,000 tons at the end of 2012-13, Oil World said.

“The potential for an even stronger buildup of global linseed and flaxseed stocks at the end of this season should support a negative bearing on prices,” the researcher said.

Linseed oil traded at $1,155 a ton at Rotterdam last week, compared with $990 for rapeseed oil and $960 for sunflower seed oil, Oil World data show.

“To prevent significant demand losses linseed oil needs to regain competitiveness in the remainder of 2013-14, thus exerting additional pressure on linseed quotations,” the industry researcher said.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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