Final oat supply numbers, quality still unclear

Alan Butuk drove 150 kilometres through northeastern Saskatchewan in the last week of March, and saw only one crop of oats in the field.

The drive would suggest that only a few Saskatchewan growers were unable to harvest oats last year because of a wet fall, but Butuk said the number is much higher.

“I’m hearing of much more,” said Butuk, who farms near Insinger, Sask., and is vice-president of the Prairie Oat Growers Association.

“There’s a good percentage of oats to be harvested this spring.”

Butuk and many others in the oat sector are seeking answers to three questions about oat supplies this spring:

  • How many acres of oats overwintered in Saskatchewan?
  • What percentage of that crop, once harvested, will make milling grade?
  • Of the oats combined in wet conditions and put in bins last fall, what percentage will be milling oats?

Industry watchers spent much of the winter trying to answer those questions.

Kenric Exner, merchandising manager with Viterra, said the fall weather affected 600,000 acres of oats, which is a sizable chunk of the 2.5 million acres of oats seeded on the Prairies in 2016.

The crop was damaged in some regions, but in other areas the oats made milling grade, Exner said at CropSphere in January.

“I don’t know if we know when we will run out of milling quality, but I’m sure we will find out in April, May, June, July,” he said.

“If it is as dire as some think, then we will see a rally, either in the basis or the futures.”

Exner said at the time that new crop bids could be $2.75 to $3 per bushel in southern Saskatchewan and $3.25 to $3.50 in southern Manitoba.

Terry Tyson, grain procurement director for Grain Millers, which operates an oat mill in Yorkton, Sask., said his company has sufficient supplies, but it will need to “get some coverage” for the summer months to bridge the gap to new crop.

“It (the supply) doesn’t feel tight. There are certainly some crops around with sprout damage and stuff that just won’t work, (but) it isn’t like that is dominating the samples that we see,” he said.

“There is some stuff … that is not real good or still out (in the field), but by and large it’s OK.”

The uncertainty around supply has generated more excitement and online chatter about oats than normal over the winter.

Most believe oat acres will jump, and the Prairie Oat Growers Association is predicting acres will rise 12 percent from last year.

Prairie growers could push oat acres even higher because fusar-ium hammered hundreds of wheat growers in 2016, especially in Sask-atchewan.

Farmers are looking for alternatives this spring, and oats are less susceptible to the fungal disease.

The oat market may need a relief valve for excess production if acres do rise substantially and yields are decent.

It may not be an immediate solution, but one possible destination is China. A report by CBH Group, an Australian grain exporter, said Chinese oat imports have gone from less than 15,000 tonnes in 2007 to 150,000 tonnes in 2014.

Almost all of those oats, 96 to 100 percent, are coming from Australia, the report said.

In 2016 calendar year Canada shipped only 1,720 tonnes of oats to China, but that was up from 785 tonnes in 2015.

Shipping oats to China from Western Canada would likely be more costly because it’s a bulky, high volume commodity.

The shift toward oatmeal and oat convenience foods is expected to continue in China because hundreds of millions of people in the middle class are switching to healthier and safer food from western nations.

“Little by little you do see more potential for business overseas (for oats),” Tyson said.

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