Sharp declines in oats futures at the CBOT (Chicago Board of Trade) over the past week are largely the result of speculative selling, but cash bids in Western Canada are also drifting lower.
Speculative fund traders were holding large net long positions in oats, which they’ve been liquidating recently, said oats merchant Ryan McKnight of Linear Grain at Carman, Man.
The economic and political uncertainty in Europe was a primary driver behind that fund liquidation, causing investors to "run for cover," he added.
Oats futures have dropped by over US35 cents per bushel over the past week.
"Combine that with the lack of weather markets in North America at the current time… and it seems to have pressured the oat market right now," he added.
The reduced liquidity in oats, compared to the other grain markets, means that the fund selling pushed the oats market down to a larger extent than some of the other commodities, he said.
Oats bids in Western Canada have declined in sympathy with the futures, with no adjustments to basis levels just yet, said McKnight.
As a result, he expected farmers would delay sales until harvest, unless prices move back to a level they like.
Manitoba farmers were looking for oats prices in the C$3.50-$4 per bushel range, while Saskatchewan growers would be content to sell for C$3-$3.25, he said.
However, "we’re under that by quite a bit," he said, noting it will take a while for basis levels to adjust themselves.
Spot bids are currently topping out at C$3.32 per bushel in Manitoba and C$2.85 per bushel in Saskatchewan, according to Prairie Ag Hotwire data.
The weaker Canadian dollar was helping prop up Canadian oat bids to some extent, as the currency has moved well below parity with its U.S. counterpart, McKnight said.