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Ag Commodity Research & Oatinformation.com
Ag Commodity Research & Oatinformation.com
Oat Situation • Oat prices off record highs - a trailing
commodity, corn and wheat primary leaders. • Cash oat prices still close to record highs. • Growers sales of oats down 18% YTD. • North American oat millers getting by with
current supplies, 2013/14 will tighten for them. • Oat supplies continue to decline. • World and US corn S&Ds extremely tight,
significant price rationing needed ahead – wheat numbers also tight. Small window
Canadian Situation • Net returns for oats near last compared to
other major grains and oilseeds – wheat, barley and peas major competitor for oats
• Oats continue to be priced as a feed grain in Western Canada, the cheapest cereal feed.
• High canola input cost versus low 2012 yields could see some shift to cereals, likely wheat
• New crop oat prices are running at less than 50% of wheat value, not supportive to oat plantings.
• Current soil moisture conditions in W. Canada improved but more favorable to higher cereal seeding in 2013, less oilseeds.
Canadian Situation
• On-farm feed demand for oats continues to slide reducing need for higher oat acres.
• 2013/14 Canadian oat end stocks forecast at nearly 60% below average, third lowest level in the past 20 years.
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00 D
ec/8
0
Dec
/81
Dec
/82
Dec
/83
Dec
/84
Dec
/85
Dec
/86
Dec
/87
Dec
/88
Dec
/89
Dec
/90
Dec
/91
Dec
/92
Dec
/93
Dec
/94
Dec
/95
Dec
/96
Dec
/97
Dec
/98
Dec
/99
Dec
/00
Dec
/01
Dec
/02
Dec
/03
Dec
/04
Dec
/05
Dec
/06
Dec
/07
Dec
/08
Dec
/09
Dec
/10
Dec
/11
Dec
/12
Continuous Monthly CBOT Oats
20%
60%
80%
40%
Top 100%
Record high
Time to Look at Oats
The Smart Farmer
Markets are Cyclical • What goes up, comes down….sometime
hard and fast! • The cure for high prices is high production! • A recovery of North Hemisphere crops will
see wheat and canola values plunge • Oat production is headed south, oat prices
will firm relative to other crops……just not yet.
2,660
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1988
19
89
1990
19
91
1992
19
93
1994
19
95
1996
19
97
1998
19
99
2000
20
01
2002
20
03
2004
20
05
2006
20
07
2008
20
09
2010
20
11
2012
20
13F
000
acre
s
Canadian Seeded Oat Area
Record Low
1,794
2,389
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
000
mt
Canadian Production
358
626
410
1,046
0 200 400 600 800
1,000 1,200 1,400 1,600 1,800
98/9
9
99/0
0
00/0
1
01/0
2
02/0
3
03/0
4
04/0
5
05/0
6
06/0
7
07/0
8
08/0
9
09/1
0
10/1
1
11/1
2
12/1
3F
13/1
4F
5 yr
avg
000
mt
Canadian Oat End Stocks
Canada Oat Stocks to Usage-Ratio
11% 13%
41%
15%
87/8
8 88
/89
89/9
0 90
/91
91/9
2 92
/93
93/9
4 94
/95
95/9
6 96
/97
97/9
8 98
/99
99/0
0 00
/01
01/0
2 02
/03
03/0
4 04
/05
05/0
6 06
/07
07/0
8 08
/09
09/1
0 10
/11
11/1
2 12
/13
Avg 31%
US Oat Stock Levels Declining
An Oat Bull Market?
You Bet! Just not yet
What’s Down the Road for Oats
Macro Markets Impacting Oats
• Food prices across all major commodities have risen and remain high relative to 2011/12.
• Speculators have been impacted by macroeconomic risks and are skittish.
• Food issues and security are increasingly a political issue, use of grains for biofuels adds to pressures
• Margin calls and liquidity constraint are increasing globally.
• The cost of doing business in commodities is increasing, along with risk.
Macro Markets Impacting Oats
• World Economy is slowing resulting in risk-off, Ag prices negatively impacted. China showing some improvement, but small.
• EU & US debt situation remain major concerns and a focus of commodity markets.
• Market volatility has increased and remains high and can lead to nasty surprises.
• China’s economy is slowing, rising food prices at center of China's inflation fight
North American Oat Demand
-
500
1,000
1,500
2,000
2,500
3,000
3,500
88/8
9 89
/90
90/9
1 91
/92
92/9
3 93
/94
94/9
5 95
/96
96/9
7 97
/98
98/9
9 99
/00
00/0
1 01
/02
02/0
3 03
/04
04/0
5 05
/06
06/0
7 07
/08
08/0
9 09
/10
10/1
1 11
/12
12/1
3F
13/1
4F
000
mt
Mill Demand Equine Demand
Moderate increase expected for milling use, higher equine demand in 2012/13 – 2013/14 unchanged
Managed Money (MM) Net CBOT Oat Position
2.882
0.846
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
-4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0
Dec
/09
Mar
/10
Jun/
10
Sep
/10
Dec
/10
Mar
/11
Jun/
11
Sep
/11
Dec
/11
Mar
/12
Jun/
12
Sep
/12
Dec
/12
$CB
OT
Oat
s
000
cont
ract
s Net MM Position
CBOT Oat $
A Peak Ahead
• Moderate oat mill demand January-March, good demand beyond March, new crop 2013 wide open.
• Canadian and EU oat supplies are ample at the moment but trending lower.
• Ag markets will remain skittish given high commodity prices.
• US equine oat demand will depend on how high corn climbs.
CBOT Corn and Oats Outlook
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00 Ja
n/03
A
ug/0
3 M
ar/0
4 O
ct/0
4 M
ay/0
5 D
ec/0
5 Ju
l/06
Feb/
07
Sep
/07
Apr
/08
Nov
/08
Jun/
09
Jan/
10
Aug
/10
Mar
/11
Oct
/11
May
/12
Dec
/12
Corn Oats Spread
Expected new crop
oat trading range
Expected new crop corn range
Average Western Canada Oat Bid
3.55
3.06
$2.25
$2.45
$2.65
$2.85
$3.05
$3.25
$3.45
$3.65
$3.85
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
11/12 12/13 5 yr avg
Average Western Canada Oat Bid
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50 Ja
n/95
Jan/
96
Jan/
97
Jan/
98
Jan/
99
Jan/
00
Jan/
01
Jan/
02
Jan/
03
Jan/
04
Jan/
05
Jan/
06
Jan/
07
Jan/
08
Jan/
09
Jan/
10
Jan/
11
Jan/
12
Jan/
13
$ cp
bu
W Cda Mill Average Manitoba Average Saskatchewan Average
80%
What to do as a Grower
• Lock a good percentage of new crop sales at prices that are near historical highs.
• Good Northern Hemisphere growing conditions will take the edge off old crop prices, don’t loose track of old crop marketing opportunities.
• Growers may get one last “kick of the old crop cat.” Don’t waste it.
• Seeded more oats!
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