Logistics still propping up old-crop oats

Published: April 8, 2014

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CNS Canada — The oats futures market remains at a considerable inverse, with the old-crop May contract in Chicago trading at an 88-cent premium over the new-crop December as logistics issues continue to hamper Canadian grain movement.

“There are oats on farm, but the U.S. mills are having a hard time physically taking possession,” said Jarrod Firlotte, general manager of Emerson Milling, as he accounted for the continued strength in the front futures months.

He said his company, situated just north of the U.S. border, was still able to source oats as it can bring in super-B truck traffic that cannot move to the U.S. mills.

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“We’re paying a lot more for freight, but we haven’t run out of oats,” said Firlotte.

Supplies on-farm were not burdensome, he said, but were “comfortable.” Rail movement is the issue, rather than supplies, and improvements to rail movement would help the oats market move back into a more normal pricing relationship.

“If the rail companies decide to deliver, the ball’s in their court,” said Firlotte.

Looking ahead to the new crop, he said some calls were coming in from producers, but it was still a little early to put out a firm estimate on new-crop acreage ideas.

Agriculture and Agri-Food Canada currently forecasts oats area in 2014 at 3.33 million acres, which would compare with 3.17 million the previous year. Statistics Canada releases its first survey-based estimates on April 24.

Spot bids for oats can now be found in the C$2.95 to $3.25 per bushel area in Manitoba, according to Prairie Ag Hotwire data.

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

 

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