In a story I did for our June 4 paper with Randy Strychar of Oat Insight, Randy told oat growers who had been refusing to sell oats during the winter slump that the present rally was a great pricing opportunity. Prices on the CBOT nearby contract were over $2.60 per bushel, which was a bunch better than $1.90. There was still a giant amount of oats in farm storage on the prairies and the big American terminals at Duluth and around Minneapolis were full. “This is kind of a miracle for the oat market,” he said.
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At the time Randy worried that farmers would be too busy with seeding to even think about marketing, whether making deliveries or just setting prices. And a rising market tends to make sellers pull back. After filing the story I met in Minneapolis with the president of the Grain Millers company, the folks who own the Yorkton oat mill. He said similar things to Randy.
“Take some coverage. You don’t have to sell all of it, but sell some of it,” he said to me about the present rally on June 6.
He doubted many growers would leap on the rally because of the natural tendency of people in a market to be too optimistic in their own interest.
“If you’re a seller of products, it’s always going to be going up tomorrow. If you’re a buyer of products, the price is always going to go down tomorrow. I hate to see it happen.”
At the time neither Randy nor the Grain Millers president would guess when the rally would end. The funds had come back into the grain markets so things could have kept getting wilder. But as commercial guys looking at enormous stocks, they thought oats at over $2.50 on the futures seemed like a pretty good price for a seller.
The present slump isn’t necessarily the end of the rally, which began in late-April. This might just be a set-back, a correction, with another big leg up over the summer if weather problems occur, demand picks up or a market mania occurs. But looking back at my conversations with these two guys in the last week of May and the first week of June, I’ve got to say they gave good advice at the time from a commercial oat industry standpoint.
