Oat futures have climbed more than 30 cents a bushel since the start of the new year, raising the question: will more acres switch from wheat to oats?
As of Wednesday, nearby and new crop oat futures in Chicago were in the 42 to 45 percent range relative to Minneapolis wheat. The flatter, quieter spot market in the prairies has reflected a similar relationship between oats and wheat.
As a rule of thumb, oat prices need to be around 50 percent of wheat values to pick up more acres, says Randy Strychar of OatInformation.com in the video below, filmed earlier this month at CropSphere in Saskatoon.
At the time, Strychar was expecting oat acres in Canada to be down five to seven percent in 2018, depending on the price relative to wheat and how many pea acres are swapped for oats due to India’s tariffs on pulse imports.
Supplies will be comfortable, even with lower acres, he says, noting he expects carryout of around a million metric tonnes compared to 600 thousand last year. There are also large stocks in Minneapolis reducing concerns about a shortage if acres or yields are down.
Strychar is bullish oats in the long term due to growing demand for oats in food products, which already accounts for around half of commercial consumption of oats.
“We’re doing some research right now. When we look out 10 years in the global oat market, someone, somewhere in the five oat milling centres around the world will have to build about 10 oat mills or about 100,000 tonnes to keep up with food demand,” he says. “Canada is a predominant player in that so that’s going to translate into more miller demand.”
Hear Randy Strychar discuss the oat market heading into spring of 2018 at CropSphere in Saskatoon (filmed January 9th):