Chicago | Reuters — The Chicago Board of Trade oat market soared 17 per cent to an all-time high on Wednesday, continuing a month-long rally on tight supplies due to backlogged rail shipments from top exporter Canada.
The biggest gains were notched in the thinly traded March contract as traders exited their short positions ahead of expiration on Friday.
“Shorts either have to deliver or cover their futures,” said Dan Anderson, a broker at ED+F Man Capital in Chicago. “Whoever is short does not have stocks to deliver and is going to have to get out — and whoever is long is not offering them a place to get out.”
Only 59 contracts in the March futures were open when trading began on Wednesday, making the market more vulnerable to wild price swings, traders said. There have been no physical shipments against the March futures during the delivery period that started on March 3, according to exchange data.
March oats, which are trading without daily limits, soared 85-1/4 cents to a record $5.63-1/4 per bushel on Wednesday, surpassing the previous high of $5.50-1/2 set a week ago (all figures US$). May and July oats each rose the daily 20-cent price limit and were locked limit-up at midday Wednesday.
Prices for oats, which are used in food and as feed for horses and hogs, have set a string of records this year amid slow shipments from Canada into the U.S., the top importer.
CBOT oats plunged last week after the Canadian government took drastic steps to force the country’s two major rail companies to each ship at least 500,000 tonnes of grain per week or face massive fines.
“This wasn’t created overnight, and it won’t be solved overnight,” said analyst Shawn McCambridge of Jefferies Bache in Chicago. “The oats market is not for the faint of heart.”
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen and Christine Stebbins.