Chicago oats rally with Prairie rains, for now

CNS Canada — Oat prices at the Chicago Board of Trade have advanced as rain soaks Canada’s crops, but one U.S. analyst doesn’t expect those gains to hold.

Close to half of Canada’s seeded oat area is in Saskatchewan, Statistics Canada data shows, and some parts of the province have seen heavy rains and flooding.

Since Canada supplies a large amount of the world’s oats, heavy rains have pushed up prices, said Terry Reilly, senior commodity analyst at Futures International LLC.

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For the most part, crops still look good, but there are pockets in Manitoba and Saskatchewan that have severe problems, said Roger Kissick, a merchant at Linear Grain.

Key areas of concern are in southeastern and central-eastern Saskatchewan. “Things look bleaker for some of those farms this week than they did last week,” he said.

Fewer deliverable oats available at the Chicago Board of Trade added to the rally, he said.

As of June 23, there were 479 oat registrations available for delivery at the CBOT — but as of Tuesday, only 42 were registered, Reilly said, noting a large amount of deliveries was cancelled in a short time.

“Obtaining oats — at least through the deliverable process at the Chicago Board of Trade — is getting a little harder,” Reilly said.

September oat prices have gained about US19 cents per bushel in the week ending Wednesday.

However, oat contracts are moving near major moving averages, which will likely limit gains going forward, Reilly said.

CBOT oats are close to 20-, 50-, and 100–day moving averages, which provide resistance.

“It might be a short-lived rally. I think it is probably weather-related,” Reilly said.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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