Oat prices could move lower due to high acreage

Canadian oat prices are expected to move lower after a Statistics Canada report showed acreage up significantly in 2013-14.

However, oats’ price spread relationship with other commodities will continue to strengthen,
said Ryan McKnight, grain merchant for Linear Grain at Carman, Man.

According to StatsCan, 3.371 million acres of oats were seeded this spring, up about 500,000 acres from 2.853 million in 2012-13.

“We’re expecting oat prices to go down if production in the major crops catches up and weather has been steady lately, which helps,” McKnight said. “Farmers were increasing oat plantings and decreasing wheat plantings because of the late seeding, and the price relationship was right.”

“We expect the price relationship between oats and other commodities to continue strengthen from where it has been,” he added.

The carryout projection for the new crop is also expected to exceed the 250,000 tonnes forecast for 2012-13.

“They’re projecting half a million tonnes for 2013-14 carryout, which is not as tight as it was in 2012-13,” McKnight said.

Though seeded acres are up in Canada, Manitoba’s acreage is down about 50,000 acres from 2012-13.

“Because it’s hot here in Manitoba, late-seeded oats don’t produce good quality,” McKnight said.

However, in Saskatchewan, roughly 500,000 more acres were seeded this spring. McKnight said unlike Manitoba, late-seeded oats in Saskatchewan will still turn out a productive harvest.

“Crops were going in a little later, so farmers in Saskatchewan seeding later put in oats,” he said. “In the northern Saskatchewan oat belt, farmers set their oats fairly late because they turn out reasonable,” he added.

Values for old-crop oats delivered to the elevator in Western Canada were as high as $4.09 per bushel, while new-crop values ranged from $3.25 to $3.75 per bushel, according to Prairie Ag Hotwire on June 28.

— Brandon Logan writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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