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Oats acres likely higher, but by how much?

(Resource News International) — Oats acres in Western Canada are generally expected to increase in 2010 despite recent price weakness, as the crop still stacks up favourably compared to other options.

Prices going forward will be dependent on the size of that increase, however, with opinions rather wide-ranging for now.

A recent survey of producers conducted by the Wild Oats market newsletter forecast a surprising 80 per cent increase in oats acres from the 3.465 million acres seeded in 2009. That would be well above the 25 per cent increase currently forecast by Agriculture and Agri-Food Canada.

Ryan McKnight, an oats merchant with Linear Grain at Carman, Man., said the industry was generally anticipating a more modest 10-15 per cent increase in Prairie oats acres.

Oats will likely take acres away from flax and wheat, he said, noting rotational issues could also limit any sizeable increases in canola acres.

From a pricing standpoint, he said oats bids would be pushed extremely low if acres increased by too much more.

Oats futures in Chicago have been under pressure from speculative selling the past few weeks, which also weighed on cash bids in Western Canada, according to McKnight.

The strong Canadian dollar was also weighing on cash values, he said, but added that the poor futures could eventually lead to strengthening of basis levels.

Oats prices typically see some seasonal strength through the winter months, but that wasn’t the case this year, according to McKnight.

Both sides of the market were currently in a bit of a standoff, he said, with the bids and the offers rather far apart.

According to the latest Prairie Ag Hotwire data, oats bids in Western Canada currently top out at $2.70 per bushel in Alberta, $2.29 in Manitoba, and $1.73 in Saskatchewan.

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