Early yield reports range anywhere from 80 to 140 bushels per acre, said Tyler Palmer, grain buyer with Emerson Milling in southern Manitoba. He said quality was reportedly very good, but it was still early going.

Ryan McKnight, of Linear Grain at Carman, Man., echoed those sentiments, noting quality was good but yields were mixed.

“We’ll be taking in a lot of oats this week,” said McKnight.

End users were relatively well covered, but oats were still priced favourably compared to other commodities, he said.

Prices are generally topping out in the $3.25 per bushel area in Saskatchewan, for both old- and new-crop oats, according to Prairie Ag Hotwire data. New-crop bids are generally a bit higher in Manitoba and lower in Alberta.

Prices were about 25 to 30 cents per bushel lower at this time last year, according to McKnight.

He expected seasonal harvest pressure could weigh on prices, but added market direction will depend on yields and on how much of the oats crop ends up being cut for greenfeed.

On paper, increased seeded acres should point to a larger Canadian oats crop, but “nobody knows how much will be cut for silage or greenfeed,” said McKnight.

Poor hay cuts in Manitoba and Saskatchewan have led to tight forage supplies, which could see some oats cut as greenfeed in cattle country.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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“It’s tough to find old-crop demand currently, as many larger-scale end-users are covered,” said Ryan McKnight of Linear Grain at Carman, Man.

Most buyers were also well covered for new-crop positions, although there was likely still some demand to fill over the summer months, he said.

Prices are generally topping out in the $3.90 per bushel area in Manitoba, $3.50 in Saskatchewan and $3.99 in Alberta, according to Prairie Ag Hotwire data. New-crop bids range from around $2.70 to $3.30 across the Prairie Provinces.

The oats market had shifted to a place where there were a number of smaller niches with their own specific requirements and pricing structures, McKnight said. Some bigger players, such as Quaker, can often bid higher than other end-users, while the glyphosate-free or identity-preserved gluten-free markets can also fetch premiums at times.

“Oats have been a bright spot in the last eight months from a price standpoint, versus other things,” said McKnight.

The solid prices likely meant oat growers planted a few more acres, and non-typical growers also showed an interest.

Canadian farmers intended to plant 3.291 million acres of oats in 2019, according to Statistics Canada data. That would be up roughly eight per cent from the previous year.

While the larger acreage base should lead to increased production, available supplies are forecast to be down slightly on the year due to a tight old-crop carryout, according to Agriculture and Agri-Food Canada forecasts.

The supply/demand balance sheet is tight on paper, but McKnight expected actual oat acres would be larger still. Statistics Canada’s updated acreage estimates will be released June 26.

With average to above-average yields, supplies will be comfortable. However, if acres don’t live up to expectations or dryness cuts into yields, the resulting supply tightness would support prices.

“Some of the drier parts of Saskatchewan aren’t necessarily big oat-growing areas, but the market will be watching the weather very closely,” said McKnight.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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“It’s been a nice little rally up,” said Scott Shiels, grain procurement manager with Grain Millers Canada on the 35 U.S. cents per bushel rise in the CBOT oats contract since the beginning of January through to Wednesday.

With little fundamental reason for the upward move, he expected the activity in the futures was tied to short-covering.

“When such a small volume is traded, it can literally be one guy who’s short and trying to run things back up,” he said.

On the cash side, spot prices are holding steady around the $3 per bushel mark, with not much activity, according to Shiels.

Looking ahead to spring seeding, he expects to see an increase in oats acres with farmers already signing onto to delivery contracts.

While oats prices may not be that exciting, they’re still profitable and Shiels didn’t think there were many better options out there.

Protein discounts on wheat, malt barley trading near feed prices, and the tariff situation in pulses were also shifting interest away from those crops. Lower input costs and dry conditions favour oats as well.

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

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“We’ve been bought up for old crop for months,” said Scott Shiels of Grain Millers Inc. at Yorkton, Sask., adding that farmers with old-crop oats are also getting optimistic and holding out for better prices.

“There’s not a lot of space at the end user,” added Ryan McKnight of Linear Grain at Carman, Man., noting most buyers are already contracted out to January 2018, which is keeping cash prices from rising to the same extent as the U.S. futures.

For new-crop, Shiels expected cash prices would be underpinned by the recent rally in wheat and the fact that Canadian oats acres didn’t quite live up to expectations.

“It’s bullish, but not really strongly bullish,” he said of the oats market. While end-users are relatively filled up for now, if the harvest is late his company will be back in the market in order to fill some commitments before the new crop arrives.

“We’re watching the crop in the field. If the harvest starts to be delayed at all we’ll have to come back to fill in a couple of weeks,” said Shiels, adding, “we don’t like to have more in the bins than we absolutely have to when the harvest begins.

Canadian farmers seeded 3.22 million acres of oats this spring, up from the 2.83 million seeded the previous year, but about 200,000 acres below earlier expectations, according to Statistics Canada data. Excessive moisture in northern Saskatchewan at seeding time limited some acres.

The overall increase in oats area on the year was due in part to disease issues in wheat in 2016. This year’s hot and dry conditions should be limiting the disease pressures for wheat.

With wheat prices also showing significant strength compared to last year, oats prices will eventually need to rise in relation to wheat if the industry wants farmers to grow the crop again in 2018, said McKnight.

“It has to keep up with wheat, or farmers will grow far fewer oats and more wheat next year,” he said. “So that should hopefully firm the oat price, as it relates to wheat.”

“That will definitely have an effect on (new-crop pricing). It will put us in a position where we’ll have to be back in the market buying acres again,” Shiels said.

New-crop oats are currently priced as high as $3.10-$3.35 per bushel across Western Canada, according to the latest Prairie Ag Hotwire data. That compares with spring wheat prices topping $9 per bushel in many locations.

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

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The delivery specs against CBOT oats futures are not milling quality, which limits the ability for end users to take delivery on the futures, said Ryan McKnight of Linear Grain at Carman, Man.

There are plenty of poorer-quality oats left in delivery warehouses that nobody wants to take, he added.

If an end user could get milling-quality oats through delivery against the futures, McKnight said, basis levels would never get this high. However, the relaxed specs make the futures a “risky hedge,” causing companies such as Linear to trade most oats on a flat price basis.

Farmers are also “are taking a stand” and showing an unwillingness to sell under $2.75 per bushel in Saskatchewan and under $3 in Manitoba, said McKnight.

The futures, meanwhile, are trading right above US$2 per bushel. Prices in Chicago fell as low as US$1.75 per bushel in March.

While a return to those low levels is possible, McKnight said such a move would only cause the futures and cash markets to disconnect even more.

Statistics Canada releases updated acreage estimates on June 29, and oats area in the country will likely be down from the 2.97 million acres forecast earlier in the spring. Canadian farmers planted 3.34 million acres of oats in 2015.

“In our backyard, there is definitely lower oat production,” said McKnight of the southern Manitoba acreage.

Planted area was down even more in northern Saskatchewan, he added, which usually has a comparative advantage when it comes to growing oats.

Anecdotally, some farmers in Saskatchewan who would normally grow a section of oats may have only seeded a quarter or half section to the crop this year.

Prices of only $2-$2.50 per bushel in northern Saskatchewan over the past six months “just weren’t enough” to draw in the acres, according to McKnight.

While the smaller Canadian acreage and the potential for tightening supply/demand balance sheets may bode well for prices down the road, McKnight said it will be tough for oats to strengthen on their own given the large wheat and corn supplies overhanging the grain markets in general.

If oat prices don’t improve over the next year, he foresaw a supply crunch.

At that point, “if they want the acres, the cash price will need to strengthen compared to other cereals.”

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

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Major U.S. customers are well covered for the time being, “with enough to last for a few months worth of milling,” said Ryan McKnight of Linear Grain at Carman, Man.

Higher pricing was available from time to time from Canadian millers, he said, but buyers and sellers were generally very far apart on price.

McKnight’s company is currently at a zero basis relative to U.S. futures, which would normally be considered strong at face value.

However, with futures trading below US$2 per bushel, the zero basis only works out to about C$2.60 per bushel when the exchange rates are factored in. Manitoba farmers wanted at least $3 per bushel, McKnight said.

Quality issues with northern Saskatchewan’s crop were another issue in the oats market, keeping some supplies out of the regular channels, he said.

Looking ahead, McKnight said many Manitoba farmers had already contracted some oats area at about $3.25 per bushel for new crop.

However, with the current softness in the market, he expected actual seedings would be down on the year as many producers look to other options, including wheat and pulses.

“I cannot find anybody willing to pay what my customers want right now,” said McKnight. “We need somebody to start buying up some oat futures, to get the price back to levels we can do some business at.”

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

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Data from Canada and the U.S. project oat yields to increase from last year, which are capping gains, but at the same time, the demand picture has improved.

Sorghum and barley commitments are mostly above the five-year average, which indicates stronger demand for minor feed grains, including oats, says Terry Reilly, senior analyst at Futures International.

A weaker Canadian dollar is lending a hand to Canada’s oat exports, he said.

So far, demand for Canadian oats has stayed near-steady with last year’s pace.

As of Nov. 2, Canada has exported 324,200 tonnes of oats, compared with 318,500 tonnes last year, according to the Canadian Grain Commission.

A Manitoba merchant reports a lot of its oats going to the U.S. and Mexico. “Demand is steady and strong,” said Jarrod Firlotte, general manager at Emerson Milling. “There’s a lot of grain, and oats is just keeping pace.”

The CBOT December oats contract broke above the 100-day moving average to close at US$2.4775 on Thursday.

“So from the technical side it’s very friendly,” Reilly said.

The December oats contract could test the 200-day moving average of US$2.54 a bushel, but oats are still relatively weak compared with corn, he added.

Manitoba’s cash prices have stayed steady despite movement in futures markets, Firlotte said.

“We’ve got enough oats bought, so we don’t really have to go and chase it.”

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.

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“I think Manitoba farmers were expecting a lot better and Saskatchewan farmers were expecting a lot worse, but really when the combines got in the field—you know everything was just sort of OK,” said Jarrod Firlotte, general manager at Emerson Milling Inc.

Delivered elevator oats in Manitoba as of Oct. 28 sit between $2.69 and $2.80, compared with the yearly range of $2.24 and $3.28, according to Prairie Ag Hotwire.

“This year everything is just kind of flat,” Firlotte said.

But producers likely won’t see lower prices in coming months. Oats traditionally track corn as competing feed grains.

“I don’t know that corn is going to get all that much cheaper. I think it’s a different scenario than we were in, say a year ago,” said Brian Rydlund, market analyst at CHS Hedging.

South America is expected to cut back on planted corn acres next year, and uncertainty about Ukraine’s crop could serve to push the market higher.

“If oats maintain their relationship with corn it’s hard to think they’re going to get a lot cheaper.”

Canada’s oat crop is estimated at 3,291,800 tonnes, compared with 2,979,008 in 2014, according to Statistics Canada.

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September oats at the Chicago Board of Trade settled Monday at US$2.2325, the lowest close for the front-month contract since June 2010.

Cash bids are currently just under C$3 per bushel in Manitoba and around $2.25 in northern Saskatchewan, said Ryan McKnight of Linear Grain at Carman, Man.

While he said basis levels were historically strong compared to the futures, there is still “just zero interest from farmers.”

Manitoba farmers were likely holding out for bids of $3.25 per bushel, McKnight said, while the magic number was closer to $2.75 per bushel in Saskatchewan.

However, he was uncertain if there was much chance of hitting those levels in the near term, especially as harvest pressure picks up.

While Canadian supplies could be tight, overall North American supply/demand fundamentals may be a little more burdensome. McKnight said the U.S. had a better-quality crop, which means more will be harvested and delivered to mills rather than going to greenfeed.

The weak Canadian dollar and strong U.S. dollar are also hurting the freight costs of shipping oats by rail to the U.S., with it being cheaper for U.S. buyers to source Scandinavian oats in some cases, he said, noting rail freight is priced solely in U.S. dollars.

“Oats are either underpriced or overpriced,” said McKnight. “It’s a thinly traded market.”

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.

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