Canada Markets

A Case for Selling Old-Crop Oats

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart highlights the trend seen in No. 2 Canada Western (CW) oats delivered to Winnipeg, as reported by Manitoba Agriculture. The black line represents the 2018-19 crop year, while 2017-18 data is shown by the grey line, 2016-17 is orange and 2015-16 is blue. (DTN graphic by Cliff Jamieson)

Prices for No. 2 Canada Western (CW) oats delivered to Winnipeg have remained well above recent years given the black line on the attached chart. While the most recent price reported by Manitoba Agriculture is $3.48/bushel delivered Winnipeg, down from the January high of $3.69/bu., there remains reports of $4/bu. bids in southern areas of the province.

Data from the past three years points to the weekly price peaking at $3.12/bu. in the month of December in 2015-16, while peaking at $3.31/bu. in the month of January in 2016-17 and at $3.01/bu. in the month of January 2017-18. By the last week of the crop year, this bid was down $0.49/bu. from the crop year high in 2015-16, $0.22 lower in 2016-17 and $0.19/bu. lower in 2017-18.

Potentially weighing on prices as we move into spring is expectations for increased acres to be planted in 2019. While current Agriculture and Agri-Food Canada estimates point to an expected 5.3% increase as of its February estimates, Farm Credit Canada has estimated a 16% increase in oat acres to be seeded. Factors such as attractive old-crop prices, tight ending stocks, reduced input costs and trade issues faced in both canola and pulse trade could make oats a more readily acceptable choice. Ongoing winter conditions and the potential for a late spring in the northern U.S. states could also lead to a move to shorter season crops such as oats.

When U.S. oat futures are considered, noncommercial traders have reduced their bullish net-long futures position for three consecutive weeks as of the latest March 5 data to 1,056 contracts, while the smallest net-long reported in 20 weeks. At the same time, this position differs from wheat, soybeans and corn futures positions reported, where a bearish net-short position was reported for the week of March 5.

Lastly, failed trade negotiations between the U.S. and China could weigh on the grain complex in general. Wednesday's headlines indicate the U.S. feels they are "in a very good position" to strike a deal, while another headline indicates that U.S. is in "no rush" to reach a deal.


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