Oat prices have rallied over the last three weeks due to the poor harvest conditions in Western Canada.

The December futures contract in Chicago has climbed more than 20 percent since the start of the month — from US$1.76/bu to around $2.15/bu.

“Earlier it looked like we were going to have plenty of oats out there,” says Chuck Penner of LeftField Commodity Research. “But now, based on this — even with a big carryover from last year — we’re not going to have enough oats to fill all of the normal milling demand and export demand that we have. So somebody is going to have to cut back.”

With a quick start to 2016-17 sales, a smaller U.S. crop and farmers starting to close bin doors, he says the tight supply story will continue into winter.

“I don’t know if I’d be in a rush to sell them right now. I think I’d let the buyers come to me as supplies work lower,” he says. “Right now we have cash bids in a lot places over C$3/bu and I think we can see more strength than that yet.”

Penner joined us on RealAg Radio on Tuesday to chat about what’s happening in the oat market:

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