Already in record high territory, the nearby May oat future tacked on almost another nickel on Tuesday to push further past the US$8/bu mark.
As can be seen on the 20-year chart below, oat futures have been locked in a near vertical uptrend since about last summer, when crops were burning up on the Canadian Prairies in the wake of widespread drought. The market did experience a setback to around $6 earlier this year but has trekked mostly higher since.
Much of the strength in the market is coming from tight supplies, with the Prairie drought reducing average Canadian yields by roughly one-third and production falling to a 10-year low of just 2.6 million tonnes. In its March supply-demand update, Agriculture Canada projected 2021-22 Canadian oat ending stocks at 200,000 tonnes, down more than threefold from the previous year and a new record low.
Ag Canada is forecasting a sharp drop in 2022-23 oat prices amid a rebound in production, although the jury remains out on whether the weather will cooperate this summer. However, moisture conditions have improved markedly across the eastern and more northern Prairie areas, which should bode well for new-crop production prospects.
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