Oat bids improve against dollar, supply pressures

(Resource News International) — Cash bids in Western Canada for both old- and new-crop oats have begun to improve slightly but the upside continues to remain limited in view of the strong Canadian dollar and the large supply situation.

“We’ve certainly seen bids for both old- and new-crop oats climb somewhat as there has been a small jump in demand,” said Real Tetrault, CEO of Emerson Milling at Emerson, Man., on the U.S. border south of Winnipeg.

“The rally in CBOT oat futures has also been a bit helpful in contributing to the firmness in old- and new-crop oat bids, but the key offsetting factor there has been the jump in the value of the Canadian dollar.”

Tetrault said the upside in the bids for oats has also been capped by the fact there is still plenty of old-crop stocks in the hands of end-users.

Statistics Canada in its May 8 grain stocks in all positions report pegged Canadian oat supplies as of March 31, in the 2008-09 crop year at 2.547 million tonnes, which was up from 2.328 million at the same time the year previous.

Statistics Canada in its April 24 acreage survey said Canadian oats area in 2009 would be 3.955 million acres, which would be down from the 4.345 million seeded in 2008. Market participants had been expecting seeded area to be in the 3.8 million- to 4.2 million-acre range.

Tetrault agreed seeded area to oats will be down in comparison to last year, which will be ultimately helpful to chewing up some of the extra supply of oats still floating around in the pipeline.

However, he also warned that the decline in oats area may not be as large as first anticipated given that producers who may be looking to plant canola may be forced to swing back to alternative crops if weather continues to delay seeding operations in Western Canada.

Old-crop cash bids for oats delivered to the elevator in Saskatchewan, as reported by Prairie Ag Hotwire, currently range from $1.62 to $2.12 a bushel, in Manitoba from $1.90 to $2.15 and in Alberta from $1.60 to $2.47.

New-crop bids for oats as reported by Prairie Ag Hotwire in Saskatchewan range from $2.10 to $2.20, in Manitoba around $2.25 and in Alberta at around $1.93.

At the end of April, old crop oats bids in Saskatchewan had ranged from $1.62 to $1.82 a bushel, in Manitoba from $1.92 to $2.00 and in Alberta from $1.75 to $2.50. New-crop bids at the end of April for oats in Saskatchewan were $1.85 to $2.20, in Manitoba around $2.25 and in Alberta around $1.93.

Tetrault said his bids for old-crop oats for June delivery were in the $2.40 a bushel range while for new crop, December/January delivery, bids were in the $2.65 range.

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