Prospects for the oats market looks more promising that that for feed barley or wheat, thanks to surprisingly large consumption in Canada, Australia's biggest grain marketer has said.

The comments came ahead of a 4.5% jump in the price of the grain in Chicago.

CBH Group, handing its oats growers a Aus$10-a-tonne top-up payment, said that oats prices in Australia were being supported by decreasing estimates for inventories in Canada, the top-ranked producing country, at the end of 2009-10.

"Ending stocks are expected to be lower than the five-year average and considerably lower than last year's record high levels," CBH grain pool boss Grant Thompson said, also noting quality concerns over Australia's crop.

The top-up payment was the second fillip in eight days for oats farmers selling through CBH, after the group raised estimates for 2009-10 pool returns by Aus$15 a tonne to up to Aus$203 a tonne, reflecting "stronger international values for oats".

'Out of the market' 

However, prospects for barley had been dented by rains in Saudi Arabia, the biggest importer, whose livestock farmers could now rely more on grazing for feeding animals.

"Saudi currently has an excess supply of 2m tonnes of feed barley which is likely to put them out of the market in the short term."

With European Union and Ukraine barley inventories high "the outlook for feed barley continues to be bearish", he added.

Price cut

The comments come a day after CBH cut estimates for its wheat pool returns, noting the drop in Chicago prices since last week's ill-received US Department of Agriculture reports.

Oats, however, remain among the few grains to see stocks decline in 2009-10 in most major producing nations.

The USDA last week increased its estimate of the quantity of US oats used in livestock feed this season by 5m bushels to 125m bushels, representing a 14.7% increase year on year.

US year-end stocks are expected to tumble 17.9% to 69m bushels (1.0m tonnes).

Traders attributed a rise of 10 cents to $2.33 a bushel in March oats in Chicago on Friday to investor feeling that prices were too low to attract many growers, meaning stocks would fall further.