Winnipeg – 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 in Carman, Man. He said most buyers were also well covered for new crop positions, although there was likely still some demand to fill over the summer months.
Prices are generally topping out in the C$3.90 per bushel area in Manitoba, C$3.50 in Saskatchewan, and C$3.99 in Alberta, according to Prairie Ag Hotwire data. New crop bids range from around C$2.70 to C$3.30 across the Prairie Provinces.
McKnight said the oats market had shifted to a place where there were a number of smaller niches with their own specific requirements and pricing structures. Some of the bigger players, like 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 on June 26.
With average to above average yields, supplies will be comfortable. However, if the acres don’t live up to expectations or the 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.