"It seems to be easing off now because we're just at some values that are just so, so high," said Kevin Dick, president of All Commodities Trading.
Prices have dropped to $40 to $41 per bushel, down from the recent highs of $45.
Many exporters had presold large volumes of flax to China at "very, very low prices" about six months ago before severe drought decimated crop yields on the Canadian Prairies and northern U.S. Plains.
When they realized it was going to be a short crop they quickly tried to cover their positions by buying up any flax they could find. That sent prices skyrocketing.
The same thing happened with U.S. millers and pet food buyers who were forced to shop north of the border for Canadian flax when they realized the U.S. crop was absolutely brutal.
However, the early-season buying spree appears to be over or at least on pause, said Dick.
"Some of the steam is going to come out of the market with the shorts having now been covered for their commitments," he said.
"I don't know if any other flax will go into China from Canada this year."
Dick estimates that the average yield in Canada was eight to 10 bushels per acre, while in the U.S. it was closer to three to four bu. His Canadian estimate is well below the official government number of 15 bu. per acre.
Canada will be competing in China and the European Union with product from the Black Sea region.
APK-Inform reports that farmers in Kazakhstan harvested 744,100 tonnes of flax, down from last year's crop of 1.06 million tonnes.
The crop was ravaged by drought and an "untypically massive pest invasion."
However, the country is expected to export 430,000 tonnes of the oilseed, up from 400,000 tonnes in 2020.
Last year's exports were curtailed by an unspecified situation at the Chinese border.
"Rail cars with flaxseed were staying at the border for five to six months," Evgeny Karabanov, founder of Severnoe Zerno Group of Companies, said during a conference organized by APK-Inform.
"Many exporters were forced to return their rail cars and resell to other markets."
The country's biggest customers are Belgium, China and Poland.
UkrAgroConsult reports that Russia exported 559,700 tonnes of flax in 2020-21, with China taking 54 percent, followed by the EU at 42 percent. It did not provide an estimate of 2021-22 production and exports.
Dick has heard that Russia and Kazakhstan's crops were disappointing due to drought.
He said it is possible they may run out of exportable flax early in 2022, which could prompt China to return to the Canadian market.
"I would say at this stage the chances are low," said Dick.
"We're pricing ourselves out of the Chinese market."
He said Canadian growers are balking at prices of $40 to $41 per bu. when last year they were salivating at values of $27 or $28 per bu.
Dick has seen competitors offering new crop bids of more than $25 per bu., which he thinks is very attractive.
He is hesitant to dangle the same price because he believes flax acres in Canada and the U.S. could be up 30 percent compared to last year.
That would eliminate much of the U.S. milling and pet food demand, depending how yields turn out, leaving China to mop up most of Canada's supplies.
"That could be very painful owning some $25 a bushel flax," said Dick.