Tight Supplies Underpin Oat Bids; Demand Rationing Expected

Sep 03, 2021

Canadian oat prices should remain well supported over the next year given the smaller crop, but some demand is expected back away as buyers look for cheaper alternatives.

While most of his customers were still taking delivery on existing contracts and not yet in the spot market, Ryan McKnight of Linear Grain in Carman, Man. said Canadian mills and other end-users were already stepping up their pricing. Oats prices have seen a steady rise over the summer, with bids topping out at $6/bu in Manitoba and nearing $5.75 in Saskatchewan.

"The mills will need (oats) but some other non-milling markets will fall away," McKnight said, adding that that while some feed demand is inelastic, the high prices will limit that buying interest. Indeed, some feed markets have already cutting back their purchases, he said.

A Statistics Canada crop production report released earlier this week pegged 2021 Canadian oat production at 3.07 million tonnes, down by 33% from the previous year.

Yield and quality this year is extremely variable, according to McKnight, with virtually all but the lowest test weight crop likely to go for milling. The smaller crop will also likely dent exports, with some eastern buyers possibly even importing oats from Europe to meet their demand, he added.

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Video: Evolution of Beef Cattle Farming

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