ELM CREEK, Man. – Tight world stocks of coarse grains, particularly corn, could help spur price rallies in oats between now and spring, says Agricore United oats merchant Brenda Anderson.
She told a Prairie Oat Growers meeting in Elm Creek Feb. 4 that world ending stocks of coarse grains are at a 20-year low, which creates the potential for corn prices to rally and pull oats prices along with them.
Tight stocks, especially in corn, are making the marketplace jittery as it watches for events that could tighten stocks further.
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Anderson said there is continued talk of China curtailing corn exports, but the avian flu outbreak in Asian poultry flocks is creating uncertainty about whether that will happen.
Large culls of poultry in that region could lower demand for corn there, freeing up more to be exported.
As for world oats production, Anderson said it was up six percent over the previous crop year, due largely to increased production in Saskatchewan and Alberta, where drought was less prevalent in 2003 than in the previous two years. However, production still remained below the five- and 10-year highs.
This year’s market has been characterized by slow and steady sales by Canadian growers, which helps keep the market stable.
As spring approaches, the market’s attention will turn to subsoil moisture conditions in the key oat-growing areas of Manitoba and Saskatchewan.
Oats prices last week withstood reports that Canadian on-farm stocks as of Dec. 31 were 2.042 million tonnes compared with 1.365 million tonnes a year earlier. Traders knew last summers’ improved production would lead to higher stocks.
Oats production in Scandinavia, a main competitor with Canada for international market share, was down about eight percent for 2003-04, making it a more normal crop. Anderson said exports from Sweden and Finland might decline as a result.
However, the EU is still subsidizing oats shipments to North America.
As well, Scandinavia still has an abundance of oats that it could be enticed to export in larger volumes if prices become attractive enough.
“If they come in more aggressively, that could keep a lid on oat prices,” Anderson said.
