Canada’s oat acres look to rise in 2017

CNS Canada –– Canadian oat acres will likely be up in 2017, as relatively favourable cash prices draw in interest from producers, according to an oats merchandiser.

Chicago Board of Trade (CBOT) oat futures have climbed sharply higher over the past month, but are still trading at a discount to the relatively steady cash market.

Some U.S. mills are paying more than others, but the Canadian prices are generally in the $3.50-$3.60 per bushel area in Manitoba, and $3-$3.10 in Saskatchewan, according to Ryan McKnight of Linear Grain at Carman, Man.

Those prices compare with the CBOT March contract that was trading Wednesday at roughly US$2.60 per bushel.

The CBOT oats contract’s structure means end-users can’t rely on milling quality when taking delivery against the futures, McKnight said. That lack of consistency was causing companies such as his to back away from using the futures or offering basis contracts.

While a more viable futures market would be welcomed, McKnight said the cash market was still sending the signals to farmers that increased acres were wanted in 2017.

Canada grew 2.8 million acres of oats in 2016, which compares with the previous five-year average of 3.1 million acres, according to Statistics Canada data.

“We’ll be seeing a lot more oat acres go in the ground, both in Manitoba and Saskatchewan,” said McKnight.

A reduced interest in growing wheat, along with profitable new-crop oats pricing opportunities of over $3 per bushel, were drawing in oats acres at the expense of wheat, he said.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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