Flaxseed and Linseed Oil

Flaxseed, also called linseed, is an ancient crop that was cultivated by the Babylonians around 3,000 BC. Flaxseed is used for fiber in textiles and to produce oil. Flaxseeds contain approximately 35% oil, of which 60% is omega-3 fatty acid. Flaxseed or linseed oil is obtained through either expeller extraction or solvent extraction method. Manufacturers filter the processed oil to remove some impurities and then sell it as unrefined. Unrefined oil retains its full flavor, aroma, color, and naturally occurring nutrients. Flaxseed oil is used for cooking and as a dietary supplement as well as for animal feed. Industrial linseed oil is not for internal consumption due to possible poisonous additives and is used for making putty, sealants, linoleum, wood preservation, varnishes, and oil paints.

Flaxseed futures and options trade at the Winnipeg Commodity Exchange. The futures contract calls for the delivery of 20 metric tons of flaxseed. The contract is now priced in US dollars per metric ton.

Prices – Flaxseed prices received by US farmers in December 2003 ended the calendar year at .97 per bushel, slightly higher than the 2002/3 marketing year (July/June) average of .91 and far higher than .53 in 2001/2 and .57 in 2000/1.

Supply – World production of flaxseed in 2002/3 fell to 2.064 million metric tons from 2.159 million in 2001/2 and was sharply below the recent peak of 2.868 million in 1999/00. By far, the world’s largest producer of flaxseed is Canada with 35% of world production (2002/3), followed by China (23%), the US (16%), and India (10%). Chinese production in 2002/3 rose by 11% to 465,000 metric tons from 2001/2, while Canadian production fell 5% to 730,000 metric tons. US production rose by 10% to 319,000 metric tons. North Dakota is the king of US flaxseed production, accounting for 97% of US production. The 2003/4 US flaxseed crop promises to be small since farmers harvested only 572,000 acres, down from 704,000 in 2002/3. US production of linseed oil in 2002/3 rose slightly to 198 million pounds from 195 million in 2001/2.

Demand – The demand (distribution) breakdown for the US flaxseed supply of 16.507 million bushels in 2002/3 was 10.150 million bushels for crushing into flaxseed oil and meal (accounting for 62% of overall supply), 3.150 million bushels for export (19%), 2.842 million as residual consumption (17%), and 365,000 bushels for seed (2%). US consumption of linseed oil in 2002/3 rose by 4% to 94.9 million pounds from 91.3 million in 2001/2.

Trade – US exports of flaxseed in 2002/3 rose sharply by 32% to 3.150 million bushels from 2.386 million in 2001/2. US imports of flaxseed in 2002/3 fell even more sharply by 56% to 844,000 bushels from 1.903 million in 2001/2. The US is a net exporter of flaxseed, exporting more than three times what it imports.