PORTAGE LA PRAIRIE, Man. – One of the world’s biggest oat buyers is
cautioning Canadian farmers against thinking they can force prices too
high.
American oat processors are already buying lots of Scandinavian oats,
and those oats could even end up in Canada if producers here hold on
too tightly to their stocks, Bruce Roskens of The Quaker Oats Co. told
the Prairie Oat Growers Association annual meeting.
“What you’ve done is reawaken the European Union,” said Roskens.
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Statcom Ltd. oats market analyst Randy Strychar said he doubts prairie
millers will buy Scandinavian oats. But they are already figuring out
when it will pay to bring in a boatload.
“If some growers hold on and push the price to more than $3.85, I can
almost guarantee you they’re going to look at that option very, very
quickly,” said Strychar.
“We saw $4 per bushel in Manitoba last year. I don’t think it’s in the
cards this year.”
Strychar said Scandinavian oats can be shipped to the Prairies for
about $3.85 per bushel at Portage la Prairie or $3.90 at Yorkton, Sask.
He cautioned growers not to assume oat prices will reach last year’s
highs, even though prairie production this year was low. This year
Sweden and Finland produced large, high quality crops. They have
already taken about 400,000 tonnes of demand that Canadian oats usually
fill. Their total exports will rise to one million tonnes this year
from about 650,000 tonnes last year.
Last year, Chicago oats prices peaked at $2.45 US per bu., but Strychar
said that almost certainly won’t happen this year. Oats futures are now
about $2 per bu., or about the same as they were last December.
Strychar said he thinks the present rally in oat futures will continue
but remain below last year’s peak because of the bountiful Scandinavian
crops. But the price will not crash either. Strychar expects prices
won’t fall below $1.70 US per bu. this winter.
Milling cash prices in southern Manitoba will probably range from
$3.25-$3.75 Cdn this winter, and from $3.50-$3.99 in western
Saskatchewan.
But growers shouldn’t hold on to their crops too long. Prices will fall
quickly if there are good spring and summer rains. A 10 percent
increase in oats production could push prices back to the $1.80-$2
level. A longer term average price for southern Manitoba milling
quality oats ranges from $1.60-$1.80 per bu. Strychar said prices will
probably tail off in April or May as buyers wait for new-crop 2003
supplies.
Some southern Manitoba buyers are offering $2.25 for new crop 2003
oats, and growers should take advantage of that, Strychar said.
While forward contracting hasn’t paid the last two years, Strychar said
it works in the long term.
