CHICAGO Feb 6 The U.S. oat market soared to an
all-time high on Thursday, ignited by a razor-thin supply of
oats moving into the United States from top exporter Canada in
the wake of logistical nightmares.
Chicago Board of Trade oat futures rose the 20-cent
daily trading limit - notching a record high of $4.63-1/4 a
bushel and surpassing the previous record of $4.59-3/4 set in
August 2008. That topped a month-long rally, with oats climbing
35 percent since early January.
Extreme cold and heavy snowfall this winter has caused
railroads to run shorter trains and slowed movement of bulk
commodities, crude oil as well as grains, out of Canada. The
harsh weather, coupled with record-large Canadian wheat and
canola harvests, has overwhelmed the Canadian National Railway
Co and Canadian Pacific Railway Ltd, resulting
in a shortage of some 40,000 grain hopper cars needed to move
crops to port or U.S. customers.
Adding to concerns earlier this week was the possibility of
a Canadian National Railway strike, but the rail and union
struck a deal late Wednesday.
"The rally is not surprising given the transportation mess
in Canada. Roughly half our oat supplies are imported on an
annual basis and most of that comes from across the border in
Canada," said Shawn McCambridge, a senior grains analyst based
in Chicago with Jefferies Bache.
"In the prioritization of who gets railcars, grain isn't on
the top of the list - it's not the highest revenue. And within
the grain list, oats is not at the top of that list either,"
McCambridge said. "Supplies could be tight for some time."
The United States imports more than half of the 160 million
bushels of oats it uses annually to produce breakfast foods and
snacks as well as feed for livestock. Oats are mostly fed to
horses but they are also finding their way into pig diets this
winter to help fight off the effects of a deadly pig virus,
Porcine Epidemic Diarrhea virus, or PEDv, analysts said.
"There's been sourcing delays out of Canada with their rail
logistics and some increased demand due to the diet issue with
PEDv going on. You want to put a little more fiber in the
rations," said Tim Emslie, a grains analyst for CHS Inc, the
largest U.S. farm cooperative, based in St. Paul, Minnesota.
Canada, the world's biggest oat exporter and second-largest
grower after Russia, produced 3.9 million tonnes in 2013, the
highest amount in five years.
U.S. grain traders also noted that for the first time in
eight years, the price of oats surpassed corn on Thursday.
CBOT March oats, which trade a fraction of the volume
of corn, closed at $4.56-1/2 a bushel on Thursday, up 13-1/4
cents, compared with March corn which ended down 1/4 cent
"When you get that type of a tension, it doesn't take much
to move oats sharply higher," McCambridge added.