CHICAGO, Ill. (Reuters) — The U.S. oat market soared to an all-time high Feb. 6, ignited by a razor-thin supply of oats from Canada in the wake of logistical nightmares.
Chicago Board of Trade oat futures rose the 20 cent daily trading limit, reaching a record high of $4.63 1/4 US a bushel and surpassing the previous record of $4.59 3/4 set in August 2008. The record price topped a month-long rally, with oats climbing 35 percent since early January.
Extreme cold and heavy snowfall this winter have forced railroads to run shorter trains and slowed movement of bulk commodities out of Canada.
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The harsh weather, coupled with record-large Canadian wheat and canola harvests, has overwhelmed Canadian National Railway and Canadian Pacific Railway, resulting in a shortage of 40,000 grain hopper cars needed to move crops to port or to the United States.
Adding to concerns last week was the possibility of a CN strike, but the railway and union struck a deal Feb. 5.
“The rally is not surprising, given the transportation mess in Canada. Roughly half our oat supplies are imported on an annual basis, and most of that comes from across the border in Canada,” said Shawn McCambridge, a senior grains analyst with Jefferies Bache in Chicago.
“In the prioritization of who gets rail cars, grain isn’t on the top of the list; it’s not the highest revenue. And within the grain list, oats is not at the top of that list, either.… Supplies could be tight for some time.”
The U.S. imports more than half of the 160 million bushels of oats it uses annually to produce breakfast foods and snacks as well as feed for livestock.
Oats are mostly fed to horses, but they are also finding their way into pig diets this winter to help fight off the effects of the porcine epidemic diarrhea virus, analysts said.
“There’s been sourcing delays out of Canada with their rail logistics and some increased demand due to the diet issue with PEDv going on,” said Tim Emslie, a grains analyst for CHS Inc.
“You want to put a little more fibre in the rations.”
Canada, the world’s biggest oat exporter and second-largest grower after Russia, produced 3.9 million tonnes in 2013, the highest amount in five years.
U.S. grain traders also said the price of oats surpassed corn Feb. 6 for the first time in eight years.
