(Resource News International) — Oats prices have moved higher over the past month, both in the CBOT futures and in the western Canadian cash market.
An oats merchant thought tightening supplies and the need to encourage acres next spring would keep values supported going forward, although movements in outside financial and commodity markets could also override the supportive fundamentals for oats.
Ryan McKnight of Linear Grain at Carman, Man. said bids in the country improved by 40 or 50 cents per bushel over the past month, following the rise in the CBOT futures market. Prices offered by his company improved from $1.75 per bushel to a high of $2.25 over the month.
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In addition to spillover support from the rise in corn prices, McKnight said harvest delays in parts of Western Canada, especially northern Saskatchewan, were underpinning oats bids. He expected Canadian oats that were still not harvested would be downgraded, with some quality issues also likely in the northern U.S.
The quality issues with the late harvested crops will exaggerate what is expected to be a tight supply situation on oats. Current estimates place this year’s Canadian oats crop at 2.9 million tonnes, well below the 4.27 million grown in 2008-09.
As a result, McKnight expected oats prices to remain supported as time progresses, due to tighter supplies and the need to buy acres next spring.
“I think we’ll be running low on oats if we don’t get more acres,” said McKnight.
Nearby demand was not very aggressive for oats after good post-harvest movement, he said, but noted end-users are looking at November-forward for coverage.
While the fundamentals look supportive, the large U.S. corn crop, and movements in the outside currency and equity markets, could spill over to weigh on oats bids and limit the upside.
