Demand pushes up cash prices for oats

Cash oats uncoupled from Chicago futures values

CBOT July 2020 oats with 20-, 50- and 100-day moving averages. (Barchart)

MarketsFarm — While scarcity of oats on the Prairies has pushed up cash prices, there has been a drop in futures prices on the Chicago Board of Trade (CBOT), two buyers said.

“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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