Winnipeg, Feb 2 (CNS Canada) – Chicago Board of Trade oats futures are relatively weak, but fairly priced, according to one U.S. analyst, and traders are looking to an Statistics Canada stocks report for indication on where to move next.
“Just looking at the market in general, oats are somewhat cheap, but right now I think they’re priced right,” said Terry Reilly, senior commodity analyst at Futures International, in Chicago.
Futures are weighed down by large supplies and a lack of fresh news amid turbulence in outside markets, Reilly said.
Investor short-covering will likely come into play ahead of Thursday’s Statistics Canada report, which Reilly expects to reflect higher oat stocks compared with a year ago.
He estimates Statistics Canada’s stocks report to show oat supplies at 2.65 million tonnes as of Dec. 31, compared with 2.553 million tonnes the year prior.
Some Canadian analysts expect stocks to be even higher at 3.1 million tonnes.
“But a lot of people are watching Canadian weather,” he said, adding that U.S. storms could also support prices.
While the slight increase in oat stocks will likely drive prices lower, the biggest influencers at play are in outside markets, especially as sharply weaker crude oil futures pressure commodity markets, Reilly said.
“And with a lack of news in the oats market, it probably makes that market a little more vulnerable than maybe corn or wheat,” he said.Traditionally oats follow corn futures, though corn has built a premium against oats.
In early activity on Tuesday corn futures at the Chicago Board of Trade were trading around US$3.6975 per bushel in the March contract, while oats traded around US$1.9850 per bushel.
“We could certainly see that spread narrow a little bit,” Reilly said. “But the price relationship seems to be about right, in my opinion.”
