Oat Market Bears Watching
Given a number of reports set for release in a few short weeks, one crop to watch may be oats. Agriculture and Agri-Food Canada should release its August supply and demand estimates any day now. As well, Statistics Canada will release its first official production estimates on Aug. 28, its July 31 stocks report on Sept. 6, and on Sept. 12 will release its model-based estimates of crop production.
There's a number of reasons why the oat market bears watching. AAFC's current forecast for 2018-19 ending stocks, at 450,000 metric tons, would be the smallest carryout in six years, 47% below the five-year average and would be close to the smallest carryout seen in Statistics Canada data going back to 1980.
While current seeded acre estimates from Statistics Canada point to an 18% increase in acres seeded this spring, challenging prairie conditions could test current production estimates. As well, a serious prairie feed shortage will result in higher-than-normal amounts of crops cut for green feed. AAFC is currently estimating that 79.2% of the seeded acres will be harvested, down from 81.3% in 2018, while over the past 10 years this number has ranged as low as 65.7% and has averaged 78.7%.
Current AAFC estimates as of July call for oat stocks to increase from 450,00 mt in 2018-19 to 600,000 mt in 2019-20, with only a modest increase in exports noted of 100,000 mt to 2.5 mmt of exports of oats and oat products.
At the same time, USDA forecasts are calling for oat imports (blue bars on the attached chart) for 2019-20 to increase by 27% from 2018-19 to 110 million bushels (1.7 million metric tons), which would be the highest volume imported in 11 years, according to USDA data. This is a year-over-year increase of roughly 361,000 mt and will in turn act to place pressure on supply channels.
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Cliff Jamieson can be reached at email@example.com
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