Farmers have taken advantage of some profitable forward prices to sell more than 250,000 tonnes of the 2001 oat crop.
The heavy forward selling indicates oats will be a popular crop option this spring, say analysts, especially for farmers in the eastern Prairies.
But interest has less to do with oat prices – which so far have been well below the $2 per bushel mark that farmers used to use a pricing goal – and more to do with dismal canola prices.
“The canola (market) is looking absolutely awful right now and I don’t see that getting any better,” said Randy Strychar, oat market analyst with Statcom Ltd. of Vancouver.
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Canola crops require more fertilizer, he said. And because of skyrocketing energy costs, fertilizer prices have soared to the moon while canola prices linger in the tank.
Strychar expects farmers to take a serious look at growing more wheat and barley too, but in Manitoba, the risk of fusarium head blight makes oats even more attractive.
At current new-crop prices, penciling in conservative yields of 60 bu. per acre, farmers can make some money, he said. In Southern Manitoba, many farmers can achieve oats yields of 80 to 100 bu. per acre.
“It’s a pretty good return per acre,” said Strychar. He estimates farmers booked oats sales of 250,000 tonnes to line companies before Christmas, for delivery next fall.
Southern Manitoba prices for 3CW oats destined for export to the United States have been in the range $1.60 to $1.65 per bu., within a nickel of last year’s forward bids.
In late December, Can-Oat Milling made its first offer for 2001 oats. Farmers immediately snapped up contracts for September delivery to the company’s Portage la Prairie, Man., plant.
Dennis Galbraith, the company’s oat buyer, said farmers like to sell some of the bulky crop early to clear bin space in the fall.
He said other farmers like to forward price oats for early fall for cash flow, since grain elevators are often plugged, making it difficult to deliver other cash crops.
Can-Oat is buying milling quality oats for $1.85 to $1.93 per bu. for delivery in October through December at its Portage plant.
Bids at its Saskatoon plant range from $1.63 to $1.73 per bu. for delivery in September through December. The lower bids reflect the higher freight from Saskatoon to major oat markets.
Forward bids for 2001 oats are 30 to 35 cents per bu. above nearby prices for oats grown last summer.
The price difference shows buyers are willing to pay more for oats in months ahead rather than take delivery and pay for storage now, explained Galbraith.
Galbraith anticipates farmers will have some good pricing opportunities for old-crop milling-quality oats in the second half of the 2000-01 crop year because of sprouting damage caused by too much rain last fall.
