Recent volatility in the lightly traded Chicago Board of Trade oats futures has not been felt in the Canadian cash market, where values look solid heading through the winter months.
March oats in Chicago hit a contract high of US$3.1750 per bushel on Nov. 19, but was back trading at around US$2.90 per tonne two days later. Futures prices overall are stronger than they were a month ago, but Canadian cash bids already rallied in October and are now holding steady. The lack of liquidity in the United States futures has turned the Canadian oats market into a cash market that doesn’t follow the futures.
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“There was a bit of a jump in mid to late October,” said Scott Shiels, grain procurement merchant with Grain Millers in Yorkton, Sask. on Canadian cash bids. The strength then was due to the delayed harvest and concerns over quality.
He said Grain Millers was offering C$3.50 per bushel for delivery out into next summer, while deferred bids were hitting the C$4.00 mark in Manitoba.
“There was a decent enough scare… However, most of the oats made it through,” said Shiels adding that everything that wasn’t swathed is still of milling quality.
“It’s not the best oats we’ve ever seen, but it’s definitely good,” said Shiels. While supplies could still get tight by the end of the crop year and keep prices propped up, the concerns aren’t as prominent as they had been, which should limit the upside.
Looking ahead to 2019 production, “we have decently aggressive bids to try and make sure we see oat acres increase this year,” said Shiels adding “we can’t afford another decrease.”
Canadian farmers seeded 3.05 million acres of oats in 2018/19, which was down by 150,000 acres from the previous year and compares with the 10-year average of about 3.5 million. Production came in at roughly 3.4 million tonnes, which compares with 3.7 million in 2017/18.
In addition to support from the tight old crop supply projections, oats are also seeing an increase in demand. “The world seems to want to eat more oats,” said Shiels. He described the commodity as “a healthy ingredient that’s being used in more and more things all the time.”
One such use is oat milk, which is already big in Europe and is starting to be seen on more North American store shelves. Shiels said facilities were being built to produce more of the drink, which could displace sales of other non-dairy beverages.
