Canadian flax prospects dimmed by China’s silk road

20.11.2017

China’s construction of a new “silk road” connecting the country to Europe isn’t likely to be good news for Canadian flax exporters.

For several years, Canada has been the main exporter of flax to China but that could likely change if Kazakhstan ever has a direct link to the China.

“We thought the Chinese market was ours, but now we could see both Russian and Kazak flax moving into China,” said Chuck Penner of Leftfield Commodity Research.

Speaking at the Grain World Conference in Winnipeg on November 15, Penner said the logistical barriers that had prevented Kazakhstan flax from getting to China were falling with construction of the new trade route.

China says it’s willing to spend as much as US$1.2 trillion to make the road a reality. It would involve clearing jungle, drilling through rock and constructing hundreds of bridges and other support structures. There’s no firm time-table on when it would be completed, but the political willingness appears to be there.

Penner says when it’s done it will become very simple to see who makes the most sense for China to import from.

“When you look at a map Kazakhstan is a heckuva lot closer to Chinese markets than Canada is,” he said.

Flax too, is facing stiff competition for acreage in Canada as pricier crops like canola take centre stage.

In 2015, Canada produced 942,300 tonnes of flax but In 2017 that number fell to 501,200 tonnes, according to Statistics Canada.

The price for flax in Saskatchewan, where roughly 80 percent of it is grown, was between C$11.50 to C$12.50 a bushel, according to the Prairie Ag Hot Wire. A year ago it was locked in a wider range of C$10.50 to C$13.00 a bushel.

Penner says creating value for flax domestically could be the key to moving forward once the silk road is built.

“We can add value domestically, talk about sustainable flooring, paint, all kind of things, there’s an opportunity to market to millennials,“ he noted.


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