CNS Canada –– High freight costs and a reluctance by farmers to sell at current prices has made for a sluggish start to the New Year for oats, according to an industry participant.
“Price expectations for oats are higher than what the current market is offering,” said Ryan McKnight, grain merchandising manager at Linear Grain at Carman, Man., and “there’s not a pile of demand.”
Price action in the futures market has weakened over the past three to four months. Large commercial stocks and future delivery points have resulted in a lot of oats in the pipeline, he noted.
“It’s a real standoff between farmers and what the market is. We’re still fighting high freight rates too; prices have come down a wee bit, but certainly not enough for me to do much business, that’s for sure,” he said.
Last year’s rates were so expensive at times, McKnight said, it wasn’t feasible to put any grain on trucks.
“Truck rates are based on supply and demand. Trucks will charge whatever they can get away with,” he said.
As far as prices go now, McKnight said, Manitoba is drawing the best bids.
“We’re above $3 (per bushel) in Manitoba,” he said, “We’re below $3 pretty much everywhere in Saskatchewan, except for maybe the very south.”
The situation could change, however, if other grains go up in price.
“Oats need the feed demand to really move anything. They’re very price-sensitive in relation to other commodities,” said McKnight.
Farmers in Saskatchewan are more likely to sell if prices can reach or exceed the $3/bu. level. Manitoba growers will be more apt to wait until $3.50, he said.
Until that happens, McKnight doesn’t see a lot of oats moving.
“When the price is where guys don’t want to sell them, you’re basically playing the waiting game.”
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.Tagged freight rates, oats, oats futures