Winnipeg, June 30 – The backlogged rail system in Canada has slowly started to move certain commodities, but oats remains on the shipping backburner, which is pushing prices lower according to some industry participants.
While oat prices at larger companies right now are quite poor, bidding at under $1 per bushel, there are some specialty-type or smaller merchandisers that are able to offer much better pricing opportunities, he says.
Johnston’s Grain Marketing in Welwyn, Saskatchewan, has oat prices this week that are sitting at $2.30 to $2.80 per bushel for old crop bids and $2.30 to $2.75 per bushel for new crop bids.
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Calloway says that prices for oats to farmers have remained fairly steady throughout the year, staying within the range of a dime up or down.
“Because we’re going mill-direct, the price is largely based upon whatever that mill is willing to pay,” said Calloway. “It’s not necessarily tied to futures pricing which have gone up by two dollars a bushel on futures, but that change never actually trickled down to the producer.”
Calloway added that at times line companies had prices up this year, while they could still get railcars into the States to move oats instead of other commodities such as wheat and canola.
“The transportation system through federal legislation has been biased to either going to the east coast to Thunder Bay and out, or West Coast to Vancouver and Prince Rupert and out,” said Mike Jubinville, the president of ProFarmer Canada. “There’s been a lack of commitment for rail traffic going north and south, and that has always been the big problem with the oat market. The rail traffic is not been adequately resourced to move north and south.”
Oats are typically shipped north and south because the majority of the milling markets are in the U.S. Midwest, he says.
“So going east and west takes us further away from where it’s got to go,” said Jubinville. “It’s ridiculous in the sense that the primary milling market is an eight-hour drive away, but we can’t get to it because we don’t have the railcars.”
Jubinville added that the backed up rail system also puts pressure on trucking transportation for other commodities, and as transportation availability decreases, commodity prices increase.
“Some of the big grain companies just have an extraordinary basis deduction that drives down the cash price, because their focusing right now on moving canola and wheat and all of that’s going east and west,” said Jubinville. “The available elevator storage space in the commercial system has made oats a minor priority behind all that.”
A report released by Statistics Canada on June 27 had forecast oat acres at 3.046 million, down from the 3.188 million forecast in the StatsCan March Seeding Intentions Report.
