Oat market dropping on speculative activity

The recent sell-off of agricultural commodities has not left oats out of its path, as values have been on the decline over the past month.

Current elevator deliveries for oats are bringing as much as $3.24 per bushel in Manitoba, $3.22 per bushel in Saskatchewan, and $3.39 per bushel in Alberta, according to Prairie Ag Hotwire. Those prices are anywhere from 15 to 57 cents per bushel lower than just one week ago.

Real Tetrault, president of Emerson Milling at Emerson, Man., said the decline in prices in Western Canada has been coming on the coattails of losses on the Chicago Board of Trade, where values have been plummeting.

“Some people are blaming Libya and the unrest there, but I don’t,” Tetrault said. “I think it’s just speculative sellers. There are certain charts that the large fund companies look at, like with 50-day and 200-day moving averages, and when it moves below those charts, they trigger. It’s more of just a liquidation from funds than anything else.”

Tetrault said the market was due for a correction, having been very bullish for the last couple of weeks.

“We’ve been going pretty well without a significant correction, but this is a major correction,” he said. “It will get out all of the small specs who don’t have the deep pockets, and it will scare a lot of people that it may not get to the big prices everyone was hoping for, like $4.50 (per bushel).”

The decline in prices could end up having an impact on the amount of acres planted across Western Canada, although it is still fairly early to tell what producers will decide to plant.

“Spring is around the corner, and it is still very much unknown how many acres of oats are going to go in and compete with wheat and those other crops,” Tetrault said. “We won’t know for sure until the fat lady sings, so to speak.

“It’s got to compete with wheat. If wheat is at the $7.50 per bushel level, oats has to be close to $3.75 per bushel, and I would expect we will see that — maybe not right off the combine, but around October or November.”

Depending on how the spring plays out with regards to acreage and moisture conditions, prices hitting $4.50 per bushel are not out of the question, he said.

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