Prices hold steady Analysts say farmers may find premium prices for quality oats following harvest
When are stagnant prices good?
When everything else is going down.
That’s why the flatness of recent oat prices is a relief to many farmers and a bullish sign to some analysts.
“Our cash bids have been fairly steady,” said Jon Driedger of FarmLink Marketing.
John Duvenaud, editor of the Wild Oats newsletter, said oats’ steadiness is nice when wheat, canola and almost every other crop’s price is falling.
“Heck, $3.15 isn’t a bad price,” Duvenaud said of the prairie cash market.
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Oat prices have had a strange year, with last winter’s epic transportation problems creating a textbook case of disjuncture between cash values and futures prices as farmers struggled to get their crops to market. Futures prices were sky-high while cash values were abysmal. Often, no bid could be found at all.
However, oat acreage has drifted lower in recent years as corn and soybeans move into its traditional areas of eastern Manitoba, while wheat and canola have stolen many acres further west.
It’s led to an acreage base that looks small for the expected demand. With recent wet weather hurting crop quality, the ability of prairie farmers to meet millers’ demand for quality oats looks limited. Already tight supplies now look extremely tight.
“We had a smaller crop, and now it’s looking mostly borderline (No.) 2-3,” said Duvenaud.
“There isn’t much good.”
Chuck Penner of Left Field Commodity Research said it’s a bullish sign if oats stay within the trading range of recent months because the North American and world grains complex is overwhelmingly bearish.
“If it can stay flat through harvest, that’s a sign of strength,” said Penner.
Oats is under harvest pressure, as is every other crop, but Kyle Sinclair of Agfinity said the crop is likely to be one of the first to feel aggressive demand-pull once that clears.
“If you have a good quality crop, there is a much greater chance of getting a quality premium going into October or November,” said Sinclair.
Rushing sales now isn’t attractive to many farmers because they don’t know if they can commit to delivering good quality.
“Guys are worried about booking a 2 CW oat,” said Sinclair.
Hanging on for at least a few weeks to price one of the most bullishly supplied crops makes sense.
“When the market is fairly flat and doesn’t seem to react too much to any kind of news, there is a chance that you will get 25 or 50 cents a bushel more if you have good quality stuff and you wait until the market just turns for you,” said Sinclair.
