The value of oats on the Chicago Board of Trade (CBOT) has eclipsed the US$4 per bushel level, and producers in Western Canada hope they can soon see the same type of price.
“There’s a strong correlation between Canadian and Chicago (CBOT) oat prices,” said grain merchant Ryan McKnight, president of Linear Grain at Carman, Man. “The values are at export parity, which helps.”
Fund buyers are leading the oats rally on the CBOT, McKnight said.
“When the funds decide to get into a market, oats are a favourable one, because there is often less than 1,000 contracts trading a day,” he said. “If these guys decide they want to buy 500 contracts of oats, they’re going to push the market up, because the oat market has had low liquidity lately.”
In Western Canada, oats were bringing as much as $3.71 per bushel in Manitoba, $3.65 per bushel in Saskatchewan, and $3.33 per bushel in Alberta, according to Prairie Ag Hotwire. The prices in Manitoba and Saskatchewan are the highest they have been this year.
Producers have been waiting for values to approach, or even exceed, the $4 level, McKnight said.
“The market needs more oats,” he said. “They’ve had a tough time keeping up with other commodities, like canola and wheat, because they can net more profits than oats at today’s values.
“If oats continues to go up here in the next few days, you never know, guys could be more apt to plant oats. But the market needs about another 20 per cent more acres than last year.”
Wet soil conditions in the fall of 2010, and the threat of flooding across many parts of Manitoba and Saskatchewan may delay seeding operations across the Prairies this spring.
Depending where you are, McKnight said, a late spring could be good news for oats.
“A lot of Saskatchewan growers tend to put them in later anyway, so a late spring could cause more acres to go in the ground,” he said.
“In (southeastern Manitoba’s) Red River Valley, if oats get seeded late, the chances are it’ll be too hot in the summer when they are flowering and the quality will be poor.”