Oat prices running out of upside

MarketsFarm — Oat prices in Western Canada have shown some strength over the past year, but competition from other crops will likely lead to an acreage reduction this spring despite the firm prices, according to market participants.

Ryan McKnight, from Linear Grain at Carman, Man., had seen prices for the crop rise last fall, but noted there has been very little movement over the past few weeks.

“Oats went from low-$3 per bushel pricing in Manitoba at harvest to well into the $4/bu. probably in late November, early December,” he said.

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“Then the futures followed it up later and we haven’t seen a lot of significant increases as of late… I don’t think we’ll see a lot of winter movement. If there’s going to be any action in the oat market, it will be from spring forward.”

According to Prairie Ag Hotwire data from Friday, high-delivered bids for oats traded from $3.60 to $4.35/bu., an increase of 21-27 cents from last year, but steady compared to last month.

Agriculture and Agri-Food Canada’s latest forecast for 2021-22 predicts oat acreage will decrease by 11 per cent to 3.46 million acres and production will fall by 16 per cent to 3.9 million tonnes.

Prospects for this year’s Canadian oat crop may be dependent on exports to Chile, milling demand and the prices of feed wheat and feed barley, McKnight added.

“I suspect that on-farm feeding of oats will be high, so we’ll be at a relatively tight market situation. Maybe not as tight as the previous couple of years, but fairly tight,” he said. “Other crops are just looking better.”

Scott Shiels of Grain Millers Canada at Yorkton, Sask. said there is still strong demand for oats, but it is facing competition from other crops.

“We’ve seen oat acres reduced in Manitoba significantly over the last number of years as producers there have found other options like soybeans and corn,” he said. “It’s going to be a battle for acres… I’d be happy with (the same amount) going into next year.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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