Scandinavian oats will be able to flow freely into the United States this year.
The office of the U.S. Trade Representative announced last week that oats had been dropped from a list of items that could be subjected to a 100 percent tariff in the ongoing trade dispute between the U.S. and the European Union over shipments of hormone-treated beef.
And that, says a market analyst with Agriculture Canada, is too bad for oats growers in this country.
“There would have been an opportunity for us to pick up some of what they usually send over,” said Duncan McKinnon.
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The July 19 announcement had no discernible impact on the oats market, which continued to languish under the weight of burdensome stock levels.
“The market had pretty much anticipated it wouldn’t be on the final list,” said Randy Strychar of Statcom Ltd.
With average to above-average crops in the works in Canada, the U.S., Scandinavia and Australia, there is little chance of a price improvement soon.
Oversupply hurts prices
The reason is simple, said Strychar. “We have a sizable oat crop coming off, and we already have 21-year-high ending stocks here in Canada, so it’s just going to be really tough to get oat prices up here.”
Besides the ample inventory of Canadian oats, high world coarse grains supplies will keep a lid on corn prices, which in turn will limit how high oats prices can climb, he said.
Oats is trading in the range of $1.05 to $1.20 (U.S.) per bushel on the December Chicago futures contract. That translates into $1.25 to $1.45 (Cdn) per bushel for a grower in Manitoba.
That’s lower than prices have been over the last three years, although still higher than the average over the past five to seven years. So while prices are down, a price of $1.40 to $1.50 still would have to be considered a decent return historically, said Strychar.
Nevertheless, $1.40 isn’t likely to attract deliveries from prairie growers, he said, since farmers have already sold about 500,000 tonnes since last October for delivery this fall at prices ranging from $1.80 to $2.
“The real conscientious oats growers have already sold a fairly decent percentage of their crop at values running 60 cents a bushel higher then current prices,” he said.
That means there won’t be as much pressure on producers to sell as some might expect. He said a price of $1.30 (U.S.) on the Chicago December contract might bring in about 250,000 tonnes off the combine, a price of $1.20 would bring in about 100,000 tonnes and anything less would attract very little interest.
