CNS Canada — A surprisingly large increase for oats acres in Statistics Canada’s planting intentions report on Thursday led to a quick drop in prices.
However, actual area will likely come in below the early expectations, as declining prices should cause some acres to shift elsewhere.
Oats plantings were pegged at 3.6 million acres by StatsCan, which would be up by 30 per cent from the previous year and the largest acreage base in six years.
Prior to the report, market participants had been anticipating a much more modest increase in oats area, with average guesses coming in at just over three million.
Chicago Board of Trade oats futures dropped sharply following the StatsCan report, hitting fresh contract lows. The July contract settled Friday at US$2.515 per bushel, while the new-crop December contract was at US$2.5925 per bushel. Both were down by over 20 cents on the week.
If the StatsCan number proves correct, “we’re going to grow too many oats this year,” said Mike Jubinville of ProFarmer Canada. Such a large acreage number was bearish for prices, which would likely lead to adjustments in some swing acres, he said.
“The StatsCan report was probably overestimated,” said Jarrod Firlotte of Emerson Milling at Emerson, Man. “We do need an increase in oats, but 30 per cent is probably a little high.”
The final carryout numbers will determine whether the increased acres are needed, he noted.
Cash bids have already come down by about 10 cents per bushel, he said.
While farmers have a lower risk and lower input costs when growing oats, they will also be reevaluating their seeding ideas in light of the latest data.
“Nothing is written in stone,” said Firlotte. In addition, weather during the growing season will also have a large part in determining just how large the actual oats crop is.
“Mother Nature will have the final say as to what exactly happens,” he said.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.