WINNIPEG, Manitoba -- Those oats you've been saving are rewarding you now. Pioneer at Mollard, Manitoba, is paying $4.17 per bushel. Emerson Milling in Manitoba is paying $4.30 for June and July delivery. Can-Oat at
Portage is $4.33. Canadian Millers in Edmonton is $3.75. Allan Johnston Grain Marketing (800-324-7778) is paying $4 per bushel freight on board farm. These are the best oat prices we've ever seen. Chicago Board of Trade oats futures were higher in 2008, but prairie cash bids have never reached this level.
Oats are hard to source. The crop last year was 2.7 million metric tons and total supplies were 3.5 million metric tons, both down 400,000 metric tons from 2011. With exports at 2.2 million and domestic use of more than 1 million, there's still a carryout, but it's not big.
Supplies had been getting tighter for some time, but with the traditional fall-off in deliveries at seeding, the crunch was on. Buyers are going beyond their normal draw trying to source supplies.
There aren't a lot of oats available, other than from the Canadian prairies. The last time prices surged, in 2007, the market was nervous about Scandinavian oats being shipped up the Mississippi. That won't happen now. Europe is self-sufficient, but it doesn't have any surplus to export.
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And, for sure, it no longer has the grain export restitutions it used to provide to exporters. When Finland and Sweden joined the European Union in 1990, they created a 400,000-metric-ton structural oat surplus the European Union got rid of through export subsidies. Now Germany, Europe's biggest miller, takes any extra oats the Scandis have and Britain, the second biggest, is self-sufficient.
American oats stocks in March were lower than in June, 2012.
Users still buying have inelastic demand. Also, the new crop is late and old crop will have to last an extra week. On the other hand, the new crop is mostly planted and has plenty of moisture. Old crop supplies include 233,000 metric tons in elevators, on-rail or at export terminals plus everything in farmers' bins.
Canola prices ease on lower demand
Cash canola prices came under pressure the week ending June 7, as the weekly canola crush dropped to the lowest level in the 2012 to '13 crop year. Domestic crushers are scaling back demand because of tighter available supplies and weaker world vegetable oil values.
Commercial stocks also have dropped to historically low levels of 525,000 metric tons, which is barely sufficient to meet export and domestic requirements in the next month. We expect the weekly crush pace to drop further, while fresh export demand for old crop canola is nonexistent. Look for old crop canola prices to drift lower into harvest. Farmer deliveries have picked up now that seeding is wrapping up.
Production uncertainty continues to support new crop canola. Growing conditions have been favorable, but warmer weather is forecast during flowering. Traders are cautious when forecasting upcoming production because yield potential can be quite variable. Farmers will only make forward sales once the crop is more certain. Limited selling pressure has provided little resistance. In addition to production uncertainty, export demand also has stepped forward for the fall, keeping the market fairly stable. Chinese buying has been noted in the past month and additional demand is expected to step forward.
The oilseed complex in general is contending with production uncertainty for U.S. soybeans. We may see an increase in U.S. soybean acres because of lower-than expected corn plantings.
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Milling wheat update
Milling wheat prices have been grinding lower throughout the spring.
Despite the seeding delays, Canadian acreage is expected to be up 14 percent from last year. Adverse rain in North Dakota has tempered seeding progress, but U.S. hard red spring wheat acres are expected to be up nearly 10 percent from last year. Don't be caught up with media hype on seeding conditions. The market feels soft for new crop. The important factor to consider is high protein spring wheat has limited demand, while half of the North American hard red spring wheat moves into mid protein markets in a normal year.
Hard red winter wheat harvest is in the early stages. The crop will be smaller than last year, but this harvest pressure will take the edge off of the protein market. Conditions in Europe, Russia and the Ukraine are quite favorable with prices a sharp discount to North American values.
U.S. corn production remains a large uncertainty, but the market is not overly concerned at this time because growing conditions have been nearly optimal. We may see lower seeded acreage, but the crop has adequate moisture to carry into July and then temperatures during pollination will be key to crop potential.
Editor's Note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, call 1-800-567-5671, e-mail admin@canadagrain.com or visit http://canadagrain.com .
