Little upside in oats as futures hit five-year lows

Reading Time: < 1 minute

Published: August 17, 2015

, ,

(Doug Wilson photo courtesy ARS/USDA)

CNS Canada –– Oats futures in Chicago are trading at their lowest levels in five years, and cash bids in Western Canada are also doing little to encourage farmer selling.

September oats at the Chicago Board of Trade settled Monday at US$2.2325, the lowest close for the front-month contract since June 2010.

Cash bids are currently just under C$3 per bushel in Manitoba and around $2.25 in northern Saskatchewan, said Ryan McKnight of Linear Grain at Carman, Man.

While he said basis levels were historically strong compared to the futures, there is still “just zero interest from farmers.”

Read Also

Photo: Getty Images Plus

Alberta crop conditions improve: report

Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.

Manitoba farmers were likely holding out for bids of $3.25 per bushel, McKnight said, while the magic number was closer to $2.75 per bushel in Saskatchewan.

However, he was uncertain if there was much chance of hitting those levels in the near term, especially as harvest pressure picks up.

While Canadian supplies could be tight, overall North American supply/demand fundamentals may be a little more burdensome. McKnight said the U.S. had a better-quality crop, which means more will be harvested and delivered to mills rather than going to greenfeed.

The weak Canadian dollar and strong U.S. dollar are also hurting the freight costs of shipping oats by rail to the U.S., with it being cheaper for U.S. buyers to source Scandinavian oats in some cases, he said, noting rail freight is priced solely in U.S. dollars.

“Oats are either underpriced or overpriced,” said McKnight. “It’s a thinly traded market.”

Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.

About the author

Phil Franz-Warkentin

Phil Franz-Warkentin

Editor - Daily News

Phil Franz-Warkentin grew up on an acreage in southern Manitoba and has reported on agriculture for over 20 years. Based in Winnipeg, his writing has appeared in publications across Canada and internationally. Phil is a trusted voice on the Prairie radio waves providing daily futures market updates. In his spare time, Phil enjoys playing music and making art.

explore

Stories from our other publications