2017 Oats Market in Review

Entering the 2017 calendar year, North American oats prices on the physical, cash market were sitting about 15-20% below their mid-2016 highs.

In the FarmLead 2017 grain markets, we said that we were expecting more rangebound activity.

Going into the new year, we tend to see a bit of uptick in market activity. We saw new crop 2017/18 oats prices in Western Canada sitting around $3.50 – $4 CAD/bushel. New crop oats prices in the United States were about $2.25 – $2.50 USD / bushel.

The market was buying acres as new crop prices were a bit stronger than the spot movement.

As such, we also suggested that oats prices “may find a little more upside, but the substitution of European supplies will limit it.”

That being said, except for the United States and Australia, acreage in the largest producing regions was expected to be higher in 2017/18. This is how harvested acres looked in 2017/18 compared to the year previous for the top 5 oats-producing countries:

• Russia: +2% to 6.92 million acres;
• European Union: +2.4% to 6.48 million acres;
• Canada: +16% to 2.6 million acres;
• Australia: -19% to 1.83 million acres; and
• United States: -18.5% to 801,000 acres.

Post-Harvest 2017 Oats Price Challenges

Some premium was built into the market over the summer of 2017 as there were quality concerns.

In July, we saw oats prices creep up again that was identified as a sellable opportunity.

However, once it was realized that the Canadian crop wasn’t that bad, prices started to deflate a bit. Also, the crop was a pretty good size in the Great White North. It was also higher in other countries where acreage wasn’t that much lower. Breaking it down:

• EU: 80.8 bushels per acre average for an 8.07 million-tonne crop (+0.5% YoY)
• Russia: average of 46 bushels per acre for a 4.9 million-tonne crop (+3.2%)
• Canada: 93.1 bushels per acre average for a 3.72 million-tonne crop (+16%)
• Australia: 39 bushels per acre average for a 1.1 million-tonne crop (-41%)
• United States: 58 bushels per acre average for a 717,000-tonne crop (-24%)

The USDA is currently estimating that 2017/18 global oats production will be about 2.5% lower year-over-year to 23 million tonnes.

Canada, the largest exporter of oats, is expected to ship out nearly 2.4 million tonnes of the cereal this year. Thus far through Christmas, Canada has shipped out 661,000 tonnes of oats, or about 30% more than what was exported by this time a year ago.

The obvious destination for Canadian oats is the United States. It’s estimated that they’ll import a little more than 1.7 million tonnes of oats in 2017/18.

The next largest importer of oats in 2017/18 is estimated by the USDA to be China at 200,000 tonnes. There’s been some buzz about Canadian oats exports to China, something that we’ve looked at here.

At the end of October, we took a deep love of the oats trade between the United States and Canada.

Ultimately, the $3 CAD and $2 USD / bushel handles seem to be the minimum to be buying acres for 2018. Those who have something to sell today should keep in mind some of our current oats sales calls in GrainCents.

What Now for Oats Prices in 2018?

With more information flying at farmers than ever, it’s difficult to get all of your insight in one place to help you make actionable decisions on your grain. That’s why FarmLead introduced GrainCents, a subscription service dedicated to telling farmers when to buy and hold their oats.

Also, we provide regular price analysis and a deep-dive into the major (and minor) factors impacting your crop every day. In GrainCents right now, there are 4 different factors that we have identified as either bullish or bearish for oats prices.

With this insight, we help you identify windows to get the best price possible for your crop. We also identify in GrainCents what percentage you should be sold on your 2017/18 old crop oats, as well as where your sales should be on your 2018/19 oats crop.

And next week, we’re giving our GrainCents oats subscribers a special report that is worth more than an annual subscription to the service on its own.

We’re unveiling our 2018 oats forecast exclusively to our GrainCents readers.

Inside this report, we’re going to discuss the critical factors that will affect your oats crop in 2018. More importantly, we’re going to begin to set our schedule for potential selling opportunities so that we can capture the best price possible in the year ahead.

Go here now to get your copy of the 2018 oats forecast.

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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