Stronger demand for minor feeds reflected in oats futures

(Lisa Guenther photo)

CNS Canada — Oats futures at the Chicago Board of Trade have been creeping higher, which a U.S.-based analyst attributes to increasing demand for minor feed grains.

Data from Canada and the U.S. project oat yields to increase from last year, which are capping gains, but at the same time, the demand picture has improved.

Sorghum and barley commitments are mostly above the five-year average, which indicates stronger demand for minor feed grains, including oats, says Terry Reilly, senior analyst at Futures International.

A weaker Canadian dollar is lending a hand to Canada’s oat exports, he said.

So far, demand for Canadian oats has stayed near-steady with last year’s pace.

As of Nov. 2, Canada has exported 324,200 tonnes of oats, compared with 318,500 tonnes last year, according to the Canadian Grain Commission.

A Manitoba merchant reports a lot of its oats going to the U.S. and Mexico. “Demand is steady and strong,” said Jarrod Firlotte, general manager at Emerson Milling. “There’s a lot of grain, and oats is just keeping pace.”

The CBOT December oats contract broke above the 100-day moving average to close at US$2.4775 on Thursday.

“So from the technical side it’s very friendly,” Reilly said.

The December oats contract could test the 200-day moving average of US$2.54 a bushel, but oats are still relatively weak compared with corn, he added.

Manitoba’s cash prices have stayed steady despite movement in futures markets, Firlotte said.

“We’ve got enough oats bought, so we don’t really have to go and chase it.”

Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.

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