Prairie oat bids ease despite tight supply outlook

(Commodity News Service Canada) — Cash bids for oats in Western Canada have been steadily easing despite the fact supplies of the commodity have been tightening.

“A lot may be decided when the Statistics Canada crop production report is released on Friday,” said Ken Ball, a broker with Union Securities in Winnipeg.

Ball felt the report would finally confirm just how many acres were seeded to oats and what production really was.

“There’s a lot of suspicion about just how many acres were taken out of production this year,” Ball said, noting farmers generally seed oats as one of their last crops but because of the wet conditions, particularly in Saskatchewan, did not get that crop in on time.

As a result, there is sentiment that a large percentage of oats were left unseeded this spring, more so than any other crop with the exception of flaxseed, he said.

Ball felt the report may show that oat area in Western Canada was a bit larger than what the trade was expecting and that output may be a bit bigger due to the long drawn-out fall, which may have provided a chance for oats to mature and fill out.

However, even with a bit bigger oats crop around, the supply base was not seen fulfilling the requirements of end-users come next spring, Ball speculated.

“What saved end-users this year were the large carryover stocks from the previous two years, and the large stockpile in the U.S.,” he said.

A cash dealer, who did not want to be identified, noted that end-users have been trying to keep cash bids for oats on the weaker side, for as long as they can, hoping to steadily draw out oats from producers.

“They don’t want to let on that maybe they are running a bit short of supply and in turn have to pay up to keep supply coming in,” the dealer said. “There is no doubt that the current prices for oats have frustrated producers.”

The dealer also agreed the StatsCan number will help determine where oat cash bids go.

“If it turns out that supplies are tighter than expected, there is no doubt end-users will have to start paying producers for those oats,” the dealer said.

Cash bids for oats, delivered to the elevator in Saskatchewan, based on Prairie Ag Hotwire data, currently range from $2.85 to $3.10 per bushel, in Manitoba around $3.21, and in Alberta from $2 to $3.

At the beginning of November, cash bids for oats in Saskatchewan were $2.97 to $3.07, in Manitoba from $3.21 to $3.35 and in Alberta from $2.16 to $3.32.

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