Oats still struggling to move south

CNS Canada — The Prairie oats industry continues to suffer from a lack of rail cars allocated to move south, as it forces some companies to truck oats to U.S. millers.

Shipping oats by truck means very expensive freight costs, resulting in lower prices for farmers, and higher prices for end users, said Ryan McKnight of Linear Grain at Carman, Man.

In Manitoba, there are some prices of around C$3 to $3.20 per bushel being offered for old crop, according to Prairie Ag Hotwire. But it’s not as easy to find prices in Saskatchewan because it’s harder to truck oats from the province to U.S. millers, McKnight said.

“In Saskatchewan there’s a lot of places that don’t have bids at all because the elevators are not sure when they’re going to get cars,” he said. “The inconsistency of cars makes it so the big grain companies don’t want to do oats.”

According to McKnight, the rail car supply for oats and other crops moving south is three to four months late, and he’s not sure when things are going to improve.

“If the railways are going to try to do the 5,500 cars a week, they have to go where they can turn their cars the fastest, and that’s not going to be U.S.-destination anything,” he added.

“They seem covered”

Because U.S. millers haven’t been able to source oats from Canada very easily due to the lack of rail cars, they’ve turned to other sources, such as Europe — in turn reducing demand for the Canadian product.

“They (U.S. millers) all seem pretty covered in the short term. I know there have been some cars applied in the last month or so, but it will be interesting to see what happens in the next couple of months,” said McKnight.

There won’t likely be much movement in the near term, as farmers have turned away from selling to focus on preparations for spring seeding.

Statistics Canada estimated that 3.19 million acres of oats would be seeded by farmers this spring in its most recent seeding intentions report. McKnight thinks that number may be a bit too high.

“With the wheat markets coming up, there could be less oat acres than what’s put on the board there,” he said.

Issues getting rail cars to move south will also likely affect the amount of acres, he added, because if grain companies aren’t looking to buy oats, farmers won’t want to grow them.

Because of uncertainty over when oats will be able to move south again, there wasn’t much new-crop contracting going on. And prices are below the C$3/bu. mark farmers are looking for, McKnight added.

— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

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