How many bushels of quality oats are in Canadian farmers’ bins?
That is a top of mind question for oat users and one that will determine pricing for the rest of the crop year.
Worries about supply appear to be causing users to issue special short-term premium offers to get supply without sparking a general rally.
Mike Jubinville, head of Pro Market Canada, told a crowd at CropSphere in Saskatoon last week that posted bids for old crop are $2.70 to $2.80, but there are also flash bids.
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“I keep hearing of these isolated opportunities, not advertised. Just contact the growers,” he said, with offers in southern Saskatchewan of $3 or more and in southern Manitoba of $3.40-$3.50.
“They are there for a couple of days. They get supply and then it’s back down, and they lay in the weeds.”
He advised growers with oats to present price offers to buyers that can be triggered when these flash contracts become available.
Kenric Exner, merchandising manager with Viterra, also said the unknown supply of quality product is the key factor in the market.
He told the crowd at the Sask-Oats annual meeting at CropSphere that western Canadian farmers cut oat plantings by about 500,000 acres, or 15 percent, last spring because of weak prices.
And then bad weather damaged a large part of the crop.
“About 600,000 acres were hit by adverse weather,” he said.
“The question is how much of that can go into milling and the (high quality U.S.) horse feed markets.”
Not everything that was snowed on in October was wrecked.
“In certain pockets we had specific damage, but other areas we’ve been able to get a milling grade,” he said.
“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. If it is as dire as some think, then we will see a rally, either in the basis or the futures.”
However, both doubted that the tighter supply would generate exceptional new crop bids.
Exner expects new crop bids will be $2.75 to $3 in southern Saskatchewan and $3.25 to $3.50 in southern Manitoba.
Jubinville thinks that given the tight supply situation, buyers might be motivated to offer the top end of Exner’s range.
“Most of the product carried over into next year is likely going to be of lesser quality. The amount of milling quality oats has got to be a concern for the Cheerios makers,” he said.
“I think $3 a bu. buys new crop oats all day long in Saskatchewan, so I’d look at that as a potential target.”
