Oat market stable and supported

Highlights

  • Cash oat market has been trending gradually upward from the spring into the summer season
  • We're judging Canadian oat crop potential for 2017 around 3.53 million tonnes
  • Oat export potential for the new crop marketing year is likely to be higher 

I have not touched on the oat market in some time, but Chicago oat futures rallied sharply through June and July. However, in my opinion, that marketplace no longer serves as a good proxy for what is happening in the Prairie cash market. Still for interest sake, Chicago oat futures are currently trading at 2.5 year highs.

Cash prices hold steady

While Prairie cash oat bids saw modest improvement from the spring into the summer market, they have in no way been as explosive as the Chicago Board of Trade oat futures gains. In fact, cash prices held steady in the last few weeks with a few buyers still floating around at $3 per bushel picked up at the farm in the southeast part of Saskatchewan. Ceres at Northgate appears to be the best in Saskatchewan at $3.15 to $3.20 a bushel.

 

"The story in oats is dependent on weather... but sprinkled in are crop quality considerations and transportation logistics to move product in a timely fashion."

 

Prices, of course, weaken the farther you move to the north and west in the province. Similar advertised bids at that top end are seen in the Red River Valley of Manitoba. Overall though, a rather ho-hum trending market.

Key regions hold steady

Most of the key oat growing region of Western Canada(essentially up and down the Yellowhead Highway from western Manitoba to Edmonton) are in stable or even improving condition. Thus our bias is to still use trend type yield expectations at this time, with normal acreage abandonment rates when sizing up production potential.

At this time, we judge Canadian oat crop potential for 2017 in the area of 3.53 million tonnes, and we will adjust according to evolving weather developments.

To come to such a forecast, we use seeded acreage of 3.22 million acres as per the latest Statistics Canada projection, acreage abandonment of 20 per cent (normal) and a trend type yield of 89 bushels per acre.

Export potential expected to rise

Oat export potential for the new crop marketing year is likely to be higher for a number of reasons:

  • United States miller inventory is low and they reportedly have a big first half 2017/18 import program in the works
  • normal demand attrition
  • smaller U.S. oat crop (100,000 few harvested acres and a return to lower more normal yield)
  • expectation that if Canada 2017 quality is decent, millers will choose to build-up reserves, especially knowing the price of spring wheat and malt barley will create strong competitors for acreage in spring 2018.

New crop 2018 oats in northeastern Saskatchewan should be all of $3 per bushel when new crop acreage contracts surface.

Bottom line

The story in oats is dependent on weather, much like all grain markets at this time of year, but sprinkled in are crop quality considerations and the transportation logistics to move product in a timely fashion.  

Mike Jubinville of Pro Farmer Canada offers information on commodity markets and marketing strategies. Call
204-654-4290 or visit www.pfcanada.com to find out more about his services.