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.

“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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“The weakness in the futures definitely has nothing to do with cash prices in the country,” said Scott Shiels of Grain Millers at Yorkton, Sask.

After some modest gains last week, the July contract for Chicago oats dropped 17.25 U.S. cents on Friday. Then, on Monday (June 8), futures dropped further, by 13.75 U.S. cents, to UC$3.1425 per bushel.

“The funds are really, really long and they are probably needing to roll out of the July contract,” said Ryan McKnight of Linear Grain at Carman, Man.

Oat prices are quite good presently, Shiels said; in Manitoba, prices were running at C$4.50-$4.75 per bushel and C$4 in Saskatchewan. “We haven’t seen C$4 oats for a while.”

Prairie Ag Hotwire listed oats in Alberta at C$4.

“As a miller, I pay what I have to pay,” Shiels said.

“We’re anticipating this extra demand to carry on for a while for oats for human consumption,” said McKnight, adding that oats have become difficult to find in Manitoba.

However, the jump in the Canadian dollar recently put a lid on further increases for oat prices on the Prairies, he said.

He also noted a lot of damaged oats came off the fields in western Manitoba and eastern Saskatchewan due to poor harvest conditions. For the most part, mills are accepting those.

“They do if they have to. It costs them too much to get good stuff and then they’ll start lowering their specs they require,” he said.

Shiels explained there is so little volume traded in oats on CBOT — a few hundred contracts per day, compared to tens or hundreds of thousands for other commodities such as corn or soybeans.

Added to that, he said there continues to be an annual discussion about oats being removed from the CBOT, but a final decision keeps being delayed. If oats were removed, he said, most likely it would never return.

“Given the amount of oats planted, a big surge in oat product demand, maybe we will see the futures start to be relevant again,” Shiels said, adding oats has almost become a specialty crop that’s very much a cash market.

Both said there have been increases in oat acres in 2020. In May, Statistics Canada estimated there would be a 6.3 per cent rise in Canadian oat acres, to more than 3.8 million.

Also last month, the U.S. Department of Agriculture (USDA) forecast an 11.1 per cent jump in U.S. oat acres, to three million. Those estimates are likely lower than what has been planted this spring, McKnight said.

Any confirmation of that will come June 11, when USDA issues its next supply and demand report. Statistics Canada isn’t scheduled to release its next set of estimates until June 29.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Agriculture and Agri-Food Canada predicted 2020 oat area at 3.93 million acres in its January report, which would be a nine per cent increase on the year and the biggest acreage base since 2008.

Statistics Canada’s first survey results for the upcoming growing season will be released April 24.

With uncertainty in many other commodities, including wheat, barley and canola, “guys are going to lean to those crops with lower inputs and are less risky to grow,” said Scott Shiels of Grain Millers Inc. at Yorkton, Sask.

Solid new-crop pricing opportunities, in the $3.25-$3.50 per bushel area, would likely make oats a more profitable option compared to canola in the prime oat growing regions, Shiels said.

On top of the reduced inputs required for growing oats, the crop also needs a shorter growing season compared to many other grains. With poor harvest weather in 2019, many canola fields were left to overwinter and will be harvested this spring. As the spring harvest will push seeding back, Shiels expected any canola land will likely go into oats.

Demand for oats has also seen steady growth from new markets in recent years, with non-dairy oat milk and the gluten-free sector “two nice little markets that are really pushing the demand for oats,” according to Shiels.

— Phil Franz-Warkentin reports for MarketsFarm in Winnipeg.

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Statistics Canada estimated 3.952 million tonnes of oats will be grown in 2019, up considerably from the 3.436 million tonnes produced in 2018. But low carryover stocks from previous years means this report has neither a bullish nor bearish effect for oat prices.

“The bins are empty, the pipelines are empty, we saw the lowest ending stocks on record,” explained Scott Shiels, a grain procurement manager with Grain Millers Canada at Yorkton, Sask.

“Even with the 15 per cent increase in production, which is based off of the 20 per cent increase in acres, we needed all of this and more.”

While cash prices for new-crop oats are likely to stay around the $2.75-$2.80 per bushel range, futures prices may move lower. However, the oats market is largely cash-driven.

“We’re going to see buyers paying what they have to pay,” he said.

“Prices where they are today are pretty reasonable in that respect.”

— Marlo Glass writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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“As of right now, it will be tight for everybody. The thing is there’s so much still to be harvested. If they get it off it might not be the best. Some of it will be OK. Anything in the swath will be garbage (for feed),” said Tyler Palmer, a grain buyer at Emerson Milling in Emerson, Man.

Emerson is currently offering $4 per bushel for oats for April-to-May delivery.

Scott Shiels, grain procurement merchant at Grain Millers in Yorkton, Sask., said the current oat harvest looks reasonable, considering the conditions, but he said supplies through the year will likely become tighter.

“We’re not completely covered for the year yet, but I think we’re going to be OK,” he said.

Last year’s carryout of 784,000 tonnes was of very good quality but seeded acreage was down this spring and while yields are good, they will not increase at this point. “It’s going to be tighter, let’s put it that way,” he said.

Shiels said it also means farmers will likely see prices climb next year as companies get closer to bringing out new-crop pricing for the 2019-20 crop.

The industry will have to encourage more acreage to get stocks back into the plus side, he said, “because we won’t have anything in the bins when harvest rolls around next year.”

Grain Millers is currently offering $3.40 per bushel for April-to-August delivery on oats, which Shiels said is considerably higher than it has offered for a few years

It’s normal for millers in southern Manitoba to bid higher, he said, because they have to draw crop from further away.

Manitoba’s most recent crop report, dated Tuesday, stated 97 per cent of the oat crop had been harvested in that province. In Saskatchewan, which produces more oats than Manitoba and Alberta combined, the oat harvest is only 70 per cent complete, according to the latest crop report issued Thursday for the week of Oct. 2-8.

For 2018, Statistics Canada estimated Saskatchewan oat production at 1.65 million tonnes, compared to 687,000 tonnes for Manitoba and 676,200 tonnes for Alberta. Alberta’s oat crop was reported at 19.5 per cent combined as of the most recent crop report issued Oct. 2.

Shiels said the oat crop in his area is about 70 per cent harvested, and most of it missed the heavy precipitation that has since stalled operations.

However, areas of northeastern Saskatchewan, around Melfort, Tisdale and Nipawin, and southwest of Saskatoon, around Biggar and Kindersley, have been the hardest hit.

“But most of our guys have a good chunk, or in some cases even all of it, taken off.”

Quality has been good as well, even in samples from crops harvested after bad weather hit. “Which is amazing,” he said.

He attributed that to the colder weather, which has inhibited sprouting. “It’s kind of knocking on wood a lot, but it’s been a so-far, so-good situation.”

A major plus, Shiels said, was the decision many farmers made to hold off on swathing.

“They’ll lose some to shattering and breaking down and what have you, but it’s a heck of a lot better than having rain while it’s in the swath for three weeks.”

Back in Emerson, Palmer said the standing oats in his area will likely see quality losses, but it can still be good for milling even with a bit of mildew.

“But it’s definitely going to be interesting, that’s for darned sure, because the prices are sure rising up pretty fast here,” he said.

Once the supply of old crop is gone, oats could be tough to come by, he added.

More supply pressure could soon appear when U.S. buyers show up, he said. They usually come to Canada looking to supplement their supplies with higher beta-glucan oats.

With drought in Scandinavia drawing down production there, it will be difficult to find alternative sources. Australia too has been hit by drought and usually sells its oats into Asian markets.

Farmers who haven’t already sold their old crop could do well to take advantage, Palmer said.

“It depends on how lucky you are or how long you want to wait. You just never know what it can do between the old crop and new crop coming off. If some places are short, I’d be paying huge dollars.”

Though it’s early yet, Shiels said he’s been surprised by the lack of interest from U.S. millers so far, especially considering that the U.S. oat crop was “just garbage.”

— Terry Fries writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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Farmers planned on seeding about 3.15 million acres of oats in the country in 2018, down only slightly from the 3.2 million seeded the previous year, according to Statistics Canada data.

Ryan McKnight of Linear Grain at Carman, Man. said the 2017 crop was very good quality, and ending stocks are expected to come in at about one million tonnes both in 2017 and again in 2018. The good quality last year meant end-users are getting a better milling yield — and need fewer oats as a result, he added.

“There are a lot of oats, and buyers are patient,” said McKnight. He expected prices would trend down over the summer, unless some bad weather hits the key growing regions.

“We’re into that time of year where it’s a weather market,” said Scott Shiels of Grain Millers Canada at Yorkton, Sask.

Oat crops, he said, were seeing even emergence and were looking good at this early stage, with recent rainfall helping moisture conditions improve in most areas. However, there was probably too much rain in some cases. Weed issues were also starting to become a problem following the rains.

Shiels said his company had pulled old-crop bids two weeks ago and was well covered for the new crop, although there was still some contracting going on. He had a new crop bid of around $3. per bushel, but noted line company bids were generally lower as they were still uncertain over their new-crop programs.

In addition to the large supplies weighing on prices, McKnight said the end-use specifications for oats were becoming more specialized, which sends different price signals.

For example, some millers may want gluten-free certification, while others are looking for glyphosate-free oats. “It’s becoming a ‘foodie’ product,” said McKnight.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow him at @PhilFW on Twitter.

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Harvest in Saskatchewan is over three-quarters complete, although recent rains have delayed that progress somewhat. The province is the dominant growing area for Canadian oats.

Bids rose five cents to a range of $2.33 to $3.04 a bushel.

According to Scott Shiels, a procurement manager with Grain Millers Canada at Yorkton, Sask., the early-harvested oats were somewhat light and thin but those came from an area in south-central Saskatchewan that had virtually no rain.

Since then, harvest has generally been better than expected, both in terms of quality and yields.

Test weights are also higher this season than they have been for the past couple of years.

This year, 1.66 million acres of oats were planted in the province, up from the 2016 figure of 1.38 million, according to Statistics Canada.

That could mean a larger carryout in oats this year, according to Shiels.

The 2016 carryout was smaller and of poor quality, so there are ideas prices could hang steady for most of the remaining year.

–– Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Chicago Board of Trade (CBOT) oat futures have climbed sharply higher over the past month, but are still trading at a discount to the relatively steady cash market.

Some U.S. mills are paying more than others, but the Canadian prices are generally in the $3.50-$3.60 per bushel area in Manitoba, and $3-$3.10 in Saskatchewan, according to Ryan McKnight of Linear Grain at Carman, Man.

Those prices compare with the CBOT March contract that was trading Wednesday at roughly US$2.60 per bushel.

The CBOT oats contract’s structure means end-users can’t rely on milling quality when taking delivery against the futures, McKnight said. That lack of consistency was causing companies such as his to back away from using the futures or offering basis contracts.

While a more viable futures market would be welcomed, McKnight said the cash market was still sending the signals to farmers that increased acres were wanted in 2017.

Canada grew 2.8 million acres of oats in 2016, which compares with the previous five-year average of 3.1 million acres, according to Statistics Canada data.

“We’ll be seeing a lot more oat acres go in the ground, both in Manitoba and Saskatchewan,” said McKnight.

A reduced interest in growing wheat, along with profitable new-crop oats pricing opportunities of over $3 per bushel, were drawing in oats acres at the expense of wheat, he said.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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“Any oats that are still out there that have had substantial amounts of rain are likely not going to make milling spec,” said Ryan McKnight of Linear Grain.

The portion of production usable for the milling market is yet to be determined, he added.

About 75 per cent of Saskatchewan’s oats have been combined, according to the province’s latest crop report, for the week ending Monday.

Oats that Linear Grain has bought from southeastern Saskatchewan are of good quality, McKnight said, but producers in northern Saskatchewan may have issues.

“Locally, here in Manitoba, we usually have troubles with test weight and stuff like that, but it’s OK,” he said.

The Canadian oat market is generally weak due to a bearish grain supply situation, but farmers won’t sell below certain prices, McKnight said. That means buyers who are short have to shell out anyway.

He pegged that price level at around $3 in Manitoba and $2.50-$2.75 in Saskatchewan.

“If somebody needs oats, you can’t really buy them cheaper in any sort of volume, so you have to pay that,” McKnight said.

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

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“There’s always a concern about quality and you never know where that is going to be until harvest,” said Art Enns, president of the Prairie Oat Growers Association at Morris in Manitoba’s Red River Valley.

Reports in South Dakota, where weather has been hot and dry, say quality hasn’t been what millers hoped for, Enns said. So far, oat crops across the Prairies are looking to fare better than their neighbours to the south.

“I think it’s varied… but overall everyone is saying the crops are looking decent, despite all the rain we’ve had,” he said.

Seeded acreage for oats is down about 15-20 per cent from last year due to strong competition from pulse and lentil crops, Enns said. With the addition of wet weather, exactly how much of a yield producers will get is still up in the air.

“Are there going to be losses due to flooding and stuff like that? Yes… We don’t know exactly what the crop is going to yield,” he said.

Disease could also become an issue with the excess moisture and reports of fusarium showing up in some areas, he said. To what extent that will affect the crops also won’t be known until harvest.

Last year, oat crops had some severe problems with lodging affecting quality, but luckily crops so far this year haven’t encountered the same issues, Enns said.

“The general crops overall are not showing as much (lodging), especially in the Red River Valley,” he said. “Last year we saw it affect quality… so I think we’re a step ahead at this point anyways, but it’s not in the bin yet.”

Prices in the Red River Valley are on the low end, but still similar to last year’s prices, Enns said.

“I know last week they were offering $3 (per bushel) off the combine; you could have sold for $3.25 (per bushel) a little bit earlier,” he said.

“We know that the carryout is going to be a little bit lower than it normally is, so there could be some demand down the road, especially closer to springtime. Could that reflect on higher prices? That’s to be determined.”

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

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