Oats market goes cold on limited demand

However, analysts expect an increase in acreage this spring

The oats market in Western Canada has gone cold, with little heat expected until closer to spring seeding.

“The basis is the thermometer, and right now oats are getting cold,” said Ryan McKnight, of Linear Grain in Carman, Manitoba, noting that basis levels were generally fading.

“We’re just not seeing much demand for oats anywhere at the moment; for nearby or deferred periods,” said McKnight adding that “buyers don’t chase grain when they’re sitting full of inventory.”

North Dakota also had a better-quality crop this year, which meant that some historic markets were not as active looking for Canadian supplies as there were cheaper oats closer to home, said McKnight.

Oats bids are currently at about $3.25 per bushel in Manitoba and $2.75 in Saskatchewan, said McKnight. While farmers would like to see prices at least 25 cents higher, he said there was obviously still enough grain moving at current levels to keep the end-use market satisfied. “I have to bid based on what I can resell it at,” he added.

While oats are looking sluggish, with both the buyers and sellers waiting to see who blinks first, spring planting conditions could be one catalyst pushing values one way or the other.

McKnight said most industry participants were still anticipating oat area to grow in 2015, as the crop compares favourably with other options.

Oats are cheap to grow and perform well, added Mike Jubinville of ProFarmer Canada. He said the economics say that oats acres should be down, but the agronomics will see growers keep them in the rotations with area likely in the three-million-acre range.

Agriculture and Agri-Food Canada is currently forecasting oats seedings at 3.09 million acres, which would be up slightly from the 2.80 million seeded the previous year. Statistics Canada releases its first survey-based acreage estimates on April 23.

About the author


Phil Franz-Warkentin - MarketsFarm

Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.



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