Duvenaud: Oats prices not flashy; supplies up
WINNIPEG, Manitoba — The best you can say about oats markets is they are functioning.
Elevators in Saskatchewan are paying $2.20 to $2.30 per bushel. Elevators in Manitoba are paying $2.60 to $3 per bushel, if they’re buying at all. At the moment, most are taking soybeans and don’t want oats cluttering their system.
The Alberta market is the strongest on the Canadian Prairies. Canadian Oats in Edmonton, Alberta, is paying $3.10 to $3.15 per bushel.
Farmers delivered oats heavily off the combine, but that business came to an end, in Manitoba anyway, about the first week of September.
There’s no shortage of oats. Statistics Canada places this year’s production at 3.3 million metric tons, up 10 percent from last year. Carryover levels are rising.
That said, the 2015 oats crop is not yet in the bin. Northern areas have been wet, and now we’re into October.
The final production number is certain to be reduced from the current Statistics Canada estimate. Hay prices were in the stratosphere in Alberta this past summer, and lots of oats were cut as silage, simply to keep the cattle fed. The amount won’t be known until Statistics Canada’s final production report in December.
Quality is becoming an issue. The first oats combined in August in Manitoba were fine, but oats currently being harvested in northern Alberta and Saskatchewan have lots of green seed issues. By July. farmers know they’re going to have harvest and quality problems. Sprouting is becoming an issue in oats being combined now.
There is some reason for optimism. The high bid in North Dakota has risen by 50 cents per bushel, to $2.50. The low bid is $1.70. Average is $2.10. North Dakota is not a major oats producer, but the state’s 1 million seeded acres compares with western Canada’s 3.5 million seeded acres. A higher proportion of North Dakota oats are cut as green feed, but there is serious business in commercial oats
Canadian buyers report business is slow. There is no great demand, and off-combine deliveries have most buyers full.
Few farmers are delivering oats at the moment, and that’s fine with most buyers.
Canola prices consolidate
Western Canadian canola prices traded in a narrow range recently, as the market adjusts to upward projections in the canola crop and harvest pressure. Producer deliveries for the week ending Sept. 27 were a whopping 673,000 metric tons. We now find commercial stocks building and pipeline supplies sufficient to satisfy nearby demand.
Statistics Canada estimated production at 14.3 million metric tons, but many traders think the final December report will be near 15 million metric tons.
The focus is turning to demand. The domestic crush pace has improved, reaching 165,000 metric tons, up from 133,000 metric tons in late September.
Year-to-date domestic demand is running very similar to last year.
Expect the crush pace to exceed year-ago levels by the end of the crop year.
Export interest has improved after a slow start. Crop year-to-date exports are now 1.4 million metric tons, compared with 1.2 million metric tons last year.
China is the wild card. Industry comments suggest China has been an active buyer and a surge in purchases is expected later in January or February. We are projecting the 2015 to ’16 canola carryout to dip down to 1.2 million metric tons, from 2.3 million last year
We are expecting farmer selling to remain at the higher levels until mid November. After the market digests the harvests, there is upside potential.
Western Canadian wheat values have been slowly trending higher in the past month, in line with the seasonal tendency.
Statistics Canada estimated the nondurum spring wheat production at 19.1 million metric tons, down from 21.3 million metric tons last year. The U.S. Department of Agriculture estimated the U.S. hard red spring wheat crop at 15.4 million metric tons, slightly higher than last year’s production of 15.1 million metric tons. Now that the northern hemisphere harvests are wrapping up, the market has breathing room as demand steps forward.
Canadian crop year-to-date nondurum wheat exports to Sept. 27 were 2.9 million metric tons. Although this is down from last year’s pace of 3.2 million metric tons, it is still robust, given the lower crop size. Canadian nondurum wheat deliveries were only 362,000 metric tons recently, so we find producers aggressively selling canola instead of wheat. This makes sense given the price comparisons.
Editor's note: Duvenaud publishes the Wild Oats Grain Market Advisory. For a free copy, call 800-567-5671 in Western Canada and North Dakota. All others call 204-942-1459.