Corrected, Jan. 17 — (Commodity News Service Canada) — Wednesday’s U.S. Department of Agriculture crop report, which showed lower stocks for both corn and soybeans, has sent oat values to fresh contract highs on the Chicago Board of Trade (CBOT), and higher in Western Canada.
Canadian oat stocks are quite low at the moment, and more acres are expected to be planted in 2011
Real Tetrault, president of Emerson Milling at Emerson, Man., said low global corn supplies have been providing bullish momentum to oats.
“Corn ending stocks are going to be quite low in July, which drove values higher,” Tetrault said. “Corn is the king of food grains, so if there’s a shortage of corn, buyers start substituting with other products, like oats.”
According to Statistics Canada, oat acres were lower in Canada in 2010, with 2.91 million seeded across the country, causing a shortage of stocks.
At least a 20 per cent increase in acres is needed to get stocks back to normal, Tetrault said.
“There are supposed to be more acres of oats (in 2011). We had a drop in acreage last spring, and then with all the rain in Saskatchewan we lost even more acres,” he said.
Although stocks are low, Tetrault said the situation isn’t a dire one, and producers shouldn’t expect values to go too much higher.
“Lots of mills have already bought product and there is lots in the pipeline, so if producers are holding out for $5 per bushel, it won’t happen,” he said. “Four dollars is likely to happen, though.”
“Even though Chicago will go up, there will be quite a wide basis,” Tetrault said. “If it’s $4 per bushel in Chicago, it likely won’t translate to $4 for the farmer. The basis could be anywhere from 25 to 40 cents.”
Current elevator deliveries for oats were bringing as much as $3.40 per bushel in Manitoba, $3.51 per bushel in Saskatchewan, and $3.25 per bushel in Alberta, according to Prairie Ag Hotwire.
CORRECTION: An earlier version of this article incorrectly gave the value for current elevator deliveries for oats in Alberta at up to $4.25. We regret the error.