(Resource News International) — Oats futures at the Chicago Board of Trade (CBOT) have climbed sharply higher over the past week due to the weather concerns in Western Canada.
The excessive moisture will likely leave a large percentage of the crop unseeded, with yield concerns possible for already planted fields.
The weather “is definitely translating into higher values,” said Ryan McKnight, an oats merchant with Linear Grain at Carman, Man., adding that fund short-covering contributed to the advances in the CBOT futures.
Prices are also up on the cash side, said McKnight. His company was currently bidding C$2.20 per bushel for oats, up from $1.85 per bushel a little over a week ago.
Industry estimates were currently forecasting that Canadian oats production could be down by 25 per cent on the year, which would lead to a significant tightening of supplies by the end of the 2010-11 crop year, he said.
However, “nobody really knows what the extent of the unseeded acres will be,” McKnight said, adding that “it’s hard to see where this will all go.”
It’s also uncertain how many late-seeded acres originally destined for other crops may end up being planted to oats, he said. However, those oats run the risk of being lower quality.
For those producers with oats in the ground, “if they are confident in their crop, they should consider selling some stuff, because the markets tend to overreact,” McKnight said, noting it might be a good time to get some new-crop pricing locked in before the eventual correction lower.
While production will likely be down from the 2.8 million tonnes grown in 2009-10, due to the unplanted fields and flooding on lower spots, McKnight said “the stuff that isn’t drowned out is doing OK.”
The actual quality of the oats that have made it through the wet spring will be dependent on conditions over the summer and at harvest time, he said.