Turning point in chia market?

In the past year (2014/2015) the chia market has cooled down substantially, as a result of a record production in 2014. In Bolivia, for example, the area sown in 2014 increased to 80000 hectares, from 50000 hectares in 2013 (CBI 2014)*. Prices to farmers have become very low, with conventional chia of unspecified quality changing hands in Bolivia for about US$1 per kg. Conventional chia with destination Europe, where strict quality requirements apply, may now be sold for US$ 2 or even less. Organic chia is sold at US$3.20 to US$4.20 FOB port of origin, depending on the contract and quality. These prices contrast sharply with export prices of up to US$10 per kg reported for 2013.

Faced with such low prices, farmers got discouraged, and as a result a  much smaller area was sown with chia. According to industry sources, in Bolivia the area sown in 2015 would be only 17000 hectares. In Bolivia, Argentina and Paraguay together, about 35000 hectares would have been sown. In 2014 the area sown in these three main producing countries was estimated to be 200000 hectares (CBI 2014)*. Adverse weather in Bolivia would also be leading to a much smaller yield: only 200 kg per ha instead of 400.

If these estimates are correct, should we expect prices to bounce back?

International demand was estimated to be 27000 tons in 2014 (CBI 2014)* and may very well grow to 35000 tons in 2015. (Mercadero will publish detailed figures about demand next week.) To produce this much chia, at least 87500 hectares will be needed, based on a yield of 400 kg/ha. Assuming that other production countries such as Mexico, Central America and Peru have also reduced production, production may not meet global demand in 2015.

But there is still a lot of stock, especially in origin countries. Whether or not prices will bounce back, will depend to a large extent on the acceptance of the chia stock in the international markets. Part of the stock is kept under refrigerated conditions, but the majority is not. Some stock is reportedly also being treated with ozone to prolong its shelflife. Part of it may also be used to press oil. Stock of poor quality may have to be written off. It is quite uncertain how much of the existing stock will be marketable. But with the current production levels, the market will at some point start to feel a scarcity again. When this will happen remains to be seen. At Mercadero, we will continue to monitor developments.

CBI Tailored Intelligence: Chia from Bolivia ‘A modern super seed in a classic pork cycle’, November 2014. Compiled by M. Peperkamp. Presented at Biofach 2015.