Millers likely to see tighter oat supplies

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CNS Canada — Oat prices are on the rise as millers attempt to secure supplies amid a difficult harvest.

“As of right now, it will be tight for everybody. The thing is there’s so much still to be harvested. If they get it off it might not be the best. Some of it will be OK. Anything in the swath will be garbage (for feed),” said Tyler Palmer, a grain buyer at Emerson Milling in Emerson, Man.

Emerson is currently offering $4 per bushel for oats for April-to-May delivery.

Scott Shiels, grain procurement merchant at Grain Millers in Yorkton, Sask., said the current oat harvest looks reasonable, considering the conditions, but he said supplies through the year will likely become tighter.

“We’re not completely covered for the year yet, but I think we’re going to be OK,” he said.

Last year’s carryout of 784,000 tonnes was of very good quality but seeded acreage was down this spring and while yields are good, they will not increase at this point. “It’s going to be tighter, let’s put it that way,” he said.

Shiels said it also means farmers will likely see prices climb next year as companies get closer to bringing out new-crop pricing for the 2019-20 crop.

The industry will have to encourage more acreage to get stocks back into the plus side, he said, “because we won’t have anything in the bins when harvest rolls around next year.”

Grain Millers is currently offering $3.40 per bushel for April-to-August delivery on oats, which Shiels said is considerably higher than it has offered for a few years

It’s normal for millers in southern Manitoba to bid higher, he said, because they have to draw crop from further away.

Manitoba’s most recent crop report, dated Tuesday, stated 97 per cent of the oat crop had been harvested in that province. In Saskatchewan, which produces more oats than Manitoba and Alberta combined, the oat harvest is only 70 per cent complete, according to the latest crop report issued Thursday for the week of Oct. 2-8.

For 2018, Statistics Canada estimated Saskatchewan oat production at 1.65 million tonnes, compared to 687,000 tonnes for Manitoba and 676,200 tonnes for Alberta. Alberta’s oat crop was reported at 19.5 per cent combined as of the most recent crop report issued Oct. 2.

Shiels said the oat crop in his area is about 70 per cent harvested, and most of it missed the heavy precipitation that has since stalled operations.

However, areas of northeastern Saskatchewan, around Melfort, Tisdale and Nipawin, and southwest of Saskatoon, around Biggar and Kindersley, have been the hardest hit.

“But most of our guys have a good chunk, or in some cases even all of it, taken off.”

Quality has been good as well, even in samples from crops harvested after bad weather hit. “Which is amazing,” he said.

He attributed that to the colder weather, which has inhibited sprouting. “It’s kind of knocking on wood a lot, but it’s been a so-far, so-good situation.”

A major plus, Shiels said, was the decision many farmers made to hold off on swathing.

“They’ll lose some to shattering and breaking down and what have you, but it’s a heck of a lot better than having rain while it’s in the swath for three weeks.”

Back in Emerson, Palmer said the standing oats in his area will likely see quality losses, but it can still be good for milling even with a bit of mildew.

“But it’s definitely going to be interesting, that’s for darned sure, because the prices are sure rising up pretty fast here,” he said.

Once the supply of old crop is gone, oats could be tough to come by, he added.

More supply pressure could soon appear when U.S. buyers show up, he said. They usually come to Canada looking to supplement their supplies with higher beta-glucan oats.

With drought in Scandinavia drawing down production there, it will be difficult to find alternative sources. Australia too has been hit by drought and usually sells its oats into Asian markets.

Farmers who haven’t already sold their old crop could do well to take advantage, Palmer said.

“It depends on how lucky you are or how long you want to wait. You just never know what it can do between the old crop and new crop coming off. If some places are short, I’d be paying huge dollars.”

Though it’s early yet, Shiels said he’s been surprised by the lack of interest from U.S. millers so far, especially considering that the U.S. oat crop was “just garbage.”

— Terry Fries writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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