Market Insight: Oat supply seen adequate

Although the area seeded to oats in Canada is down 19 per cent in 2008, the market
should remain fairly well supplied in 2008-09.

Both the Canadian and U.S. crops are
generally in good shape; there is a fairly large carry-in from the 2007-08 crop year,
and North American processor demand remains flat. There is the potential for other
global factors, such as issues with Australian and Scandinavian crop conditions or
Japanese buying to influence prices, but the fact that North America makes up 80

per cent of global production, consumption and trade renders these things less
important.

Despite the adequate supplies, domestic oat bids had strengthened prior to this week’s
futures market correction. However, this was driven largely by speculative buying in
the futures market and in sympathy with surging corn prices.

Prairie cash bids lagged
the gains seen in futures as buyers widened out basis levels, particularly for fall
delivery. Cash bids are showing a significant premium for delivery later in the
2008-09 marketing year, another indication that buyers are well covered through fall
and into winter.

— The FarmLink Market Insight was researched and produced by FarmLink Marketing Solutions, a marketing advisory service for Prairie farmers, and is published here with permission of the authors.

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