Cash price steady | With little crop moving to the U.S., buyers are willing to pay a premium
Heavy demand for rail cars is supporting Canadian prices on oats moving south, say officials.
“I’ve been surprised how well oats has held,” said Art Enns, president of the Prairie Oat Growers Association.
Southern Manitoba producers are seeing prices of $3.40 to $3.50 a bushel.
Oats have historically averaged 60 percent of the value of corn but have had a multi-month run of 70 percent or more this year.
Brian Voth, a marketing adviser with Agri-Trend, said his clients have sold 70 percent of their oat crop from this season, averaging $3.70 per bu. He expects growers to hold onto the remaining crop.
“I don’t think you’ll see the cash prices really drop substantially,” he said.
“There is a lot of demand for oats, and the supply side is not that big.”
Area seeded to the crop rose about 4.6 percent to three million acres this year but was still down significantly from historical numbers, pushed out by new crops and shorter rotations.
Voth said supplies are tight to the United States, Canada’s largest oat buyer.
“The reason you’ve seen the cash price so strong this fall is because of the logistics problems on the rail side. Elevators aren’t shipping out oats,” he said.
“So (buyers in northern states), they’ve been paying premiums on spot markets to get stuff down there.”
He’s aware of an elevator south of Winnipeg that was trucking oats into South Dakota.
“They’re just bypassing the elevator,” he said.
“Obviously, that’s how much they needed it down there.”
Enns said American millers he spoke with this fall had concerns about supply after a large Canadian harvest.
He recently returned from a trip to Mexico, Canada’s second biggest oats buyer, where he spoke with processors.
“People weren’t complaining about the transportation as much. The larger companies all said that they were still getting their stuff on a regular and timely basis,” he said. “So it kind of surprised us a little bit.”
A Statistics Canada report from November pegged oat production at 3.3 million tonnes, up 16 percent, but because of low carry in stocks total supply is expected to increase by only four percent over last year’s historically small volume. Agriculture Canada expects the tight supply will limit price declines.
Statistics Canada updated its production outlook after The Western Producer’s deadline.
The U.S. Department of Agriculture continues to project cash prices as high as $3.50 per bushel.
“With the pricing the way it is now, it may attract a little bit more acres next year, maybe away from wheat or barley,” said Voth.
“But I think it’s going to depend on what happens with prices over the winter.”