Oats are a farmer’s best friend this fall.
Unlike the glutted situation of most other crops, oats are offering farmers a good price and Statistics Canada just gave hope for significantly better prices in coming months.
“This was a real eye-opener for the oat market,” said Ag Commodity Research oat market analyst Randy Strychar about Statistics Canada’s September estimate of 2005 crop production. “But I can’t find any buyers who want to believe it.”
Statistics Canada said farmers produced 3.33 million tonnes of oats. Analysts’ pre report estimates averaged 3.8 million.
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Farmers already believe that oats are short and prices are heading higher, said Terry Tyson of Popowich Milling in Yorkton, Sask.
“It’s going to be harder to get it out of the bin because most guys are looking for an upside in oat prices,” Tyson said.
“Most producers around here already had a bullish sentiment. It was no secret that there were complications with supply because of the weather in (Manitoba’s) Red River Valley.”
However, Tyson said he thought the yield projections for Saskatchewan oats are much too low and may be corrected in the next report. Crops in his area are much better than last year.
The oat numbers were the best news in an otherwise depressing report, which verified average production in most other crops, undercutting hopes for higher prices. .
The report found slightly more wheat and canola than it had foreseen in August, but not enough to move commodity markets. Barley was slightly reduced and flax was little changed.
The survey was conducted between Aug. 29 and Sept. 14, which means data was collected before much of the bad weather that slowed harvest and degraded crops in many areas.
Brian Clancey of Stat Market Research said he thinks most special crops won’t have suffered too much from the recent wet harvest weather, but production is likely to be cut in the December production report.
“I’d be surprised if we don’t see more change in the next report in some of the numbers for the smaller crops, like chickpeas,” Clancey said.
Strychar said oat buyers aren’t yet accepting the Statistics Canada numbers, but there’s little question that the Prairies are short of milling quality oats.
“Even if they’re out by 100,000 tonnes, so what? We’ve got a problem here. We’ve got too few oats here for the milling market,” said Strychar.
The North American oat milling market needs 1.6 million tonnes per year.
The Red River Valley, which usually produces most of the milling oats crop, produced little. Even if a far higher proportion than usual of Saskatchewan oats was sold as milling oats, the market would probably still be short.
“We’ve got a deficit,” Strychar said.
That will drive buyers to Alberta, which will cost them 20 to 25 cents per bu. more than buying oats in Manitoba, which is nearer U.S. Midwest oat processors. This will effectively raise prices by at least that much in Manitoba and Saskatchewan.
“I’m pretty optimistic about oat prices,” said Strychar.
Statistics Canada ever-so-slightly lowered its estimate of pea and lentil production. Canadian pea production is now pegged at 3.17 million tonnes, two percent smaller than what the agency had penciled in back on July 31.
There was no national lentil number in the September report but the Saskatchewan crop is expected to yield 1.19 million tonnes, also a two percent decline from the previous estimate. While small in magnitude the downward adjustment is welcome news in the pulse industry because carryout stocks for both crops are expected to be at or near record levels.
Manitoba’s bean crop is forecast at 46,300 tonnes, a disappointing harvest by any measure, although a slight improvement over last year’s 38,500 tonne crop. When the other provinces are added to the mix Canada is expected to produce 286,500 tonnes of beans, a 34 percent improvement over last year’s crop.
