Cash bids for oats across the Prairies have increased since last month. Drought conditions in the U.S. Midwest have been the major supportive factor, but decreased Prairie acreage has contributed to the long-term strength in western Canadian oat prices, according to experts.
Current bids for oats in Manitoba are between $3.29 and $3.68 per bushel delivered to the elevator, up from the same day in June when prices peaked at $3.03, according to Prairie Ag Hotwire.
Saskatchewan is seeing oat bids ranging between $2.62 and $3.21 per bushel, an increase from the $2.29-$2.64 range seen last month.
Alberta’s cash oat bids held most steady, between $2.50 and $3.02 per bushel, compared to the $2.22-$3.05 range seen last month.
The extreme lack of moisture in key corn-growing regions in the U.S. over the past month has caused oats to follow the upward price action seen in U.S. corn.
Because corn is a staple animal feed, when its futures go up, the futures of other feed follow as well. The high futures lead to higher prices, said Jarrod Firlotte, general manager of Emerson Milling at Emerson, Man.
Going forward, Firlotte said oats is “going to be a weather market, definitely.”
However, diminished western Canadian oat acreage has also underpinned the strength in prices for oats, said Ryan McKnight, grain merchant with Linear Grain. He predicted that over the past few years, as much as 30 to 40 percent of Manitoba oat acreage has been replaced by other crops.
The shift has lessened oat supplies and provided strength to values in the remaining crop, he added.
“Oats have not seen the relative gains like some of the other crops have. So whenever the canola bubble bursts and farmers plant less of it, oats acreage could go back up.”
Over the next few months, McKnight said end-users might shy away from oats until bid prices ease.
“I was told by a feed buyer that there are other crops that are cheaper and are nutritionally better than oats from his point of view,” he said.
— Ryan Kessler writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.