Who Will Grow Oats In 2009?

I can’t remember the last time there was so much indecision among producers about whether to consider oats as part of their regular crop rotation this spring.

Producers whom I’d consider to be “oat growers” are shaking their heads at the prospect of potential fall prices and are looking more and more favourably at other cereals as part of their rotation. Oats may be the black sheep of cereal crops in the coming crop year. Or they may be the most surprising Cinderella story.

What’s happened thus far? Between last July and through combining season, milling oat prices fell dramatically — just like most other grains and oilseeds. During November 2008, prices for the following fall were in the $2.20 per bushel range, at the bin. As of February 13, prices for the upcoming fall were reported in the dismal $1.75 range. That’s the number causing oat growers to shake their heads.

What do you do — especially when a large amount of the current crop of oats still remains in the bin? Since harvest, much of the milling quality oats sold have gone directly into the feed market. Yes, feed markets in many instances have paid a higher price than selling into the milling market. What concerns me somewhat with all the oats still on farm is will there be a rush of selling prior to seeding or harvest? Oats take up a lot of space and it’s typically not a crop a producer continues to hold over — especially when other, more valuable crops may be held instead. A rush of selling does not typically lead to an increase in price, in fact, the opposite usually occurs.

On the other hand, if fewer acres ARE seeded to oats (by the way, the same concerns and issues are being hammered-over by U. S. farmers), will the producers who do decide to continue with their oat seeding intentions be rewarded with higher prices due to the simple fact of decreased supply?

TIPS TO HELP WITH YOUR OAT DECISION

If your intention is to plant oats this spring, keep these points in the back of your mind:

Choose your variety carefully. Speak with the human consumption mills and ask which varieties they prefer to use at their mill. Their answers may be different. In Alberta, the two most popular varieties over the past number of years by both the grower and the buyer are AC Morgan and Derby. Check with your local seed growers for newcomers and seed that could be more suited for your particular growing zone. Some varieties typically grown for feed or silage simply don’t have the best characteristics for the milling market.

Test early. Samples sent in a few weeks after harvest can often take a month or more to get results back. Beat the rush. Get your results quickly, which can then be used at your convenience. The important thing is to request your oat weights be recorded in metric (grams per half litre). If weights are done by bushel weight, the results can be misleading. The chart shows how pounds per Avery bushel differ from pounds per Winchester bushel.

Some human consumption mills, for example, look for a minimum test weight of 240 grams per half litre. If you’ve had your oats weighed using a Winchester bushel weight and have been told your oats “only” weigh 37 pounds, you may automatically assume the oats are NOT suitable for a premium market based upon weight when, in fact, the weight can be perfectly acceptable. Know your cost of production. Although $2 per bushel may seem inconsequential compared to other grains and oilseeds, it may still provide a profit on some farms. You won’t know, however, unless you’ve performed a cost of production analysis.

Understand the oats price range. We’ve seen milling oat prices anywhere from $1.50 to $4.25 per bushel in the past number of years. Prices are influenced by supply and demand and by the state of our local and global economies and the influence of speculators (understand basics of technical analysis).

Sadly, I often hear the following comment applied to many crops: “I need more money for my grain. Inputs have increased and I just can’t make a profit on this crop.”

The reality is “the market” doesn’t care if you make a profit. I can’t recall one buyer that has ever asked, “Do you think if I increased my price, the farmer would make a profit?” Farmers in western Canada are experts at grain production, in my opinion. Marketing, however, is the tough part. Know your costs. Know your rotation requirements. Seeding decision time is right around the corner.

Shelley Wetmore is owner of Market Master, a feedgrain brokerage and consulting service based in Edmonton. You can reach her toll free at 1-800-440-8390 or visit www.grain-watchdog.com.

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