Oats market solid, watching weather

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MarketsFarm — Tight old-crop supplies are keeping oats prices well supported in Western Canada, although buyers are covered for the time being and waiting for a clearer picture on new-crop production.

“It’s tough to find old-crop demand currently, as many larger-scale end-users are covered,” said Ryan McKnight of Linear Grain at Carman, Man.

Most buyers were also well covered for new-crop positions, although there was likely still some demand to fill over the summer months, he said.

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Prices are generally topping out in the $3.90 per bushel area in Manitoba, $3.50 in Saskatchewan and $3.99 in Alberta, according to Prairie Ag Hotwire data. New-crop bids range from around $2.70 to $3.30 across the Prairie Provinces.

The oats market had shifted to a place where there were a number of smaller niches with their own specific requirements and pricing structures, McKnight said. Some bigger players, such as Quaker, can often bid higher than other end-users, while the glyphosate-free or identity-preserved gluten-free markets can also fetch premiums at times.

“Oats have been a bright spot in the last eight months from a price standpoint, versus other things,” said McKnight.

The solid prices likely meant oat growers planted a few more acres, and non-typical growers also showed an interest.

Canadian farmers intended to plant 3.291 million acres of oats in 2019, according to Statistics Canada data. That would be up roughly eight per cent from the previous year.

While the larger acreage base should lead to increased production, available supplies are forecast to be down slightly on the year due to a tight old-crop carryout, according to Agriculture and Agri-Food Canada forecasts.

The supply/demand balance sheet is tight on paper, but McKnight expected actual oat acres would be larger still. Statistics Canada’s updated acreage estimates will be released June 26.

With average to above-average yields, supplies will be comfortable. However, if acres don’t live up to expectations or dryness cuts into yields, the resulting supply tightness would support prices.

“Some of the drier parts of Saskatchewan aren’t necessarily big oat-growing areas, but the market will be watching the weather very closely,” said McKnight.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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