Even if American oats take up a larger share of the North American
market this year, they probably won’t keep it, says analyst Randy
Strychar.
That’s because American farmers don’t really want the market, and
they’re not willing to work for it.
“The U.S. crop has no relevancy,” said Strychar.
“Canada just has a better trading system for the American (buyers).”
About 95 percent of North American milling oats requirements are
supplied by Canadian prairie farmers, mainly from Manitoba and eastern
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Saskatchewan.
American farmers grow oats, but usually keep them for greenfeed or
feed. The United States Department of Agriculture is forecasting a big
jump in acreage and production of milling oats in the U.S. this summer,
but Strychar is skeptical.
He said U.S. subsidy programs have made oats unattractive, so U.S.
farmers don’t take the crop seriously.
But for Canadians, who can make good money on oats compared to other
crops, growing a good crop and marketing it right makes sense.
That’s why Canadian farmers are so willing to forward contract their
crops to buyers. It’s what the buyers want.
American growers, on the other hand, tend to sell right off the
combine, which creates uncertainty for buyers who want guaranteed
supply.
The buyers prefer to deal with a market that gives them what they need.
Canadian grain companies are aggressive in buying from farmers and
offering large quantities to commercial users.
But American grain companies don’t tend to buy oats in bulk, so buying
in the U.S. can be a problem for a commercial user.
“They don’t want to have to go to 20 U.S. companies to get what you
could get from one in Canada,” said Strychar.
Canadian farmers have proven themselves to be excellent growers and
marketers, which is why they will hold the market, Strychar said.
“We’re very good at it, we grow good oats, we grow large quantities and
we’re really responsive to market factors.”
