Rising prices may encourage more oats acres

Oats prices at both the Chicago Board of Trade and in Western Canada have rallied over the past week, which could help bring some more acres to the crop this spring. However, competition from other crops and weather issues at seeding time could still sway the market.

After weather issues in Saskatchewan hampered Canadian production last year, the tightening oats supply situation would point to the need for increased production. Agriculture and Agri-Food Canada currently forecasts ending stocks of only 550,000 tonnes, and many market analysts are working with an even smaller number.

However, for most of the winter, oats prices had not looked strong enough to bring back enough acres. A recent U.S. Department of Agriculture report forecast acres actually going down 10 per cent on the year in the country.

Given the tightening supplies, North American oats would do well to see a 10 per cent increase in acres, said Jarrod Firlotte, of Emerson Milling at Emerson, Man.

The strong Canadian dollar was tempering the cash prices in Canada, he said, but noted that the gains in the CBOT futures were providing some direction for the market.

New-crop December oats at the CBOT are trading at contract highs of around US$4.09 per bushel, having risen by over 60 cents per bushel from their lows in mid-March. Firlotte said his company was currently offering new-crop bids for September delivery of C$3.65 per bushel, and C$3.75 for October/November.

Oats will need to compete with wheat for acres, he said, and it was uncertain at this early stage if oats would be able to get that 10 per cent acreage increase.

Oats are a crop that can go in the ground later than some others, which could favour more acres if the fields are slow in drying out this year.

“If there are any kind of weather concerns, (oats prices) have every reason to go up,” said Firlotte, “but whether or not that happens remains to be seen.”

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