BRANDON — Farmers who are blue about today’s futures prices for oats and spring wheat should get ready to be bluer, says technical analyst David Drozd.
He said oat futures will probably drop to $2.15 per bushel and spring wheat to $5.35.
“Oats values could be worse,” Drozd told the Manitoba Oats Growers Association’s annual meeting at Manitoba Ag Days held here Jan. 21-23. “If you’re only normally going to be locking in 15 or 20 percent (of planned new crop acreage), this year you might want to do a little more.”
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Oat futures are artificially high because of the transportation problems getting them to the main U.S. oat milling areas, including Minneapolis.
Oat futures would now be $2.65 to $2.80 if it wasn’t for the problem of getting oats to Minneapolis, Drozd said.
On Jan. 27 March oats were trading around $4 a bu. and December new crop at $2.91.
If corn futures prices are falling toward $3.80 per bu., which he believes they are, then oats will likely fall to about $2.15 per bu.
Drozd said the $3.80 price for corn and $2.15 for oats are a key technical points where the upside price breakout occurred in July 2010. He said it makes sense to retrace to that point, considering the ample ending stocks for both crops.
He also expects wheat to track back to those July 2010 break-out levels, with Minneapolis spring wheat falling to $5.35 per bu., Kansas City hard red winter wheat to $5.15 and Chicago soft red to $5.05.
Drozd sees no lasting upside potential for crop prices right now, which makes marketing both old and new crops important for farmers.
“I believe that yesterday was a good day to sell, today is the next best and they won’t be as good tomorrow.”
