One Twitter comment yesterday said it all, suggesting "sell everything, buy oats." The oat futures market has paid little attention to the bearishness seen in the other grains, moving up 6 1/2 cents Monday, 12 3/4 cents Tuesday, 13 cents on Wednesday and a further 18 1/4 cents in today's trade, for a total move this week (so far) of 50 1/2 cents per bushel.
The continuous weekly chart indicates the oat future is close to a test of resistance at the December high of $3.98 1/2/bu., while additional resistance lies ahead from weekly highs in July of $4.05 1/4/bu., then again at $4.13/bu.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT T
The milling oat market in Western Canada, however, may be oblivious to this move in futures, other than the dealers who may be forced to widen basis levels constantly. Logistics on both sides of the border are largely behind the squeeze in futures, while cash milling oats in Manitoba have flat-lined around the $3.00/bu. level.
The attached chart compares the weekly close of the nearby future on the Chicago Mercantile Exchange, as seen by the red line. The blue line represents the cash price for 2 CW oats delivered Winnipeg, as reported by Manitoba Agriculture. While this data is available to Dec. 20, it has been extended forward with bids received from cash brokers. The main point here is the disconnect in cash oats as the future takes flight to higher levels.
With Canada's facilities weeks behind in shipping, there is no need or appetite for aggressive bidding for product at the time being, as grain companies struggle to keep up to date on grain already contracted. While there are some mill bids for February forward, there are reports suggesting that finding buyers can be a challenge.
Today's release of the week 21/22 Grain Statistics Weekly from the CGC indicates oat exports total 445,920 metric tonnes as of Jan. 5, while producer deliveries into licensed facilities total 852,410 mt. As of the same week in 2012, exports were 123,680 mt higher. Oat exports to date are 485,000 mt behind the steady pace required to meet the current AAFC forecast of 2.2 mmt for the 2013/14 crop year.
Cliff Jamieson can be reached at firstname.lastname@example.org
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