Higher oats bids needed to bring in acres

Oat bids in Western Canada dropped in sympathy with U.S. futures over the past few weeks, but will need to keep in line with other cropping options in order to make sure enough acres go in the ground this spring.

“The fundamental perspective hasn’t changed. (Oats) will need to be competitive with wheat and canola for the acres to go in,” said Ryan McKnight, of Linear Grain at Carman, Man.

McKnight said risk aversion from speculators led to a downturn in both the futures and the cash bids offered to producers, as cash prices in western Canada generally show a 95 to 98 per cent correlation with CBOT futures.

While spot oat bids in southern Manitoba in the $2.70 per bushel area as much as a dollar off the levels seen as little as a month ago, McKnight recommended farmers check with a number of buyers if they need to move some product. Better spot opportunities were available in some cases if buyers were short, he said.

For new-crop bids, McKnight said current offers of $3.10 per bushel would need to move higher in order to bring in the necessary area.

Acres are very much up in the air. McKnight said there were conflicting ideas in the marketplace, with some talk of reductions in oats area, but other anecdotal reports of seed dealers running out of seed supplies due to the strong demand.

With canola and wheat also offering good returns, McKnight said new-crop oats prices would need to move to the $3.25-$3.50 area to get seeded, but added that “it’s all relative.”

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Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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