Post on 28-Jun-2020
Oat Outlook OATINFORMATION.COM
OATINFORMATION.COM
Canadian Situation Improved But…
OATINFORMATION.COM
Its Dicey
6 Key Factors Driving NA Oat Markets
•Tight Canada oat end stocks •Canadian rail car supply •2015 Canadian oat plantings •Lack of CBOT oat carry •North American feed use of oats •Global currencies
OATINFORMATION.COM
Canada Oat End Stocks
OATINFORMATION.COM
Canadian Oat End Stocks
363
1,031
525 515
848
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
87/8
888
/89
89/9
090
/91
91/9
292
/93
93/9
494
/95
95/9
696
/97
97/9
898
/99
99/0
000
/01
01/0
202
/03
03/0
404
/05
05/0
606
/07
07/0
808
/09
09/1
010
/11
11/1
212
/13
13/1
414
/15F
15/1
6F5
yr a
vg
00
0 m
t
OATINFORMATION.COM
Closer to record low than the
average
Record low
Canada Oat Stock-to-Use
11% 13% 16% 16%
0%5%
10%15%20%25%30%35%40%45%87
/88
88/8
989
/90
90/9
191
/92
92/9
393
/94
94/9
595
/96
96/9
797
/98
98/9
999
/00
00/0
101
/02
02/0
303
/04
04/0
505
/06
06/0
707
/08
08/0
909
/10
10/1
111
/12
12/1
313
/14
14/1
5F15
/16F
OATINFORMATION.COM
Avg 23%
Canadian Oat Exports to US
1,314
1,249
405 384
-
500
1,000
1,500
2,000
2,50000
/01
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
3
13/1
4
14/1
5F
15/1
6F
5 yr
avg
Crop Year (Aug-Jul)
000
mt
Horse demandMill demand
OATINFORMATION.COM
6 yr high
Canada Oat Product Exports
335 355
375
150
200
250
300
350
400
02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15F15/16F 5 yravg
000
mt
OATINFORMATION.COM
Record highs
Canada On-Farm Feed Use of Oats
350550750950
1,1501,3501,5501,7501,9502,150
96/9
7
97/9
8
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
3
13/1
4
14/1
5F
15/1
6F
000
mt
OATINFORMATION.COM
Record low
Rail Car Supply
OATINFORMATION.COM
Canadian Rail Car Supply
•This is primary to oat price direction •US oat market requires a minimum of 400 cars per week •Crude will remain a competitor for grains and oilseeds • Crude by rail forecasts mixed • CPR 140,000 cars in 2015, down from 187,000 cars in 2014 • CNR 292,000 cars in 2015, up from 217,000 in 2014
OATINFORMATION.COM
Canadian Exports Remains Strong
OATINFORMATION.COM
Railway Performance
OATINFORMATION.COM
Hindering oat exports
OATINFORMATION.COM
75% of Canada’s oat exports from CNR
Oats versus Wheat
OATINFORMATION.COM
- A Battle for Acres
Saskatchewan Wheat/Oat Cash Spread
99
36
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
Apr/14 May/14 Jun/14 Jul/14 Aug/14 Sep/14 Oct/14 Nov/14 Dec/14 Jan/15 Feb/15
$CPM
T
OATINFORMATION.COM
Wheat minus oats
12 month avg $55
RR’s focusing on port shipments versus US
Oats Look More Profitable
Type of grower Crop New Crop price $bu
Yield Gross margin Cost per acre Net margin per acre
“Real” Oat Grower
Oats 2.75 120 330 275 55
Wheat 6.00 50 300 275 25
“Average” Grower
Oats 2.75 81 223 275 -52
Wheat 6.00 38 228 275 -47
OATINFORMATION.COM
Canada Oat Plantings
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
F
Mill
ion
acre
s
SeededHarvested
OATINFORMATION.COM
Minimum 3.2 Mil Ac needed
Canadian Oat Seeded Area Scenario's
2014 0% 5% 10% 15% 20% 25% 30% 35%
Seeded area 2.8 2.8 2.94 3.08 3.22 3.36 3.5 3.64 3.78
Production 3.19 2.83 2.97 3.11 3.25 3.39 3.53 3.67 3.81
End stocks 0.565 0.092 0.233 0.375 0.516 0.657 0.799 0.940 1.081
OATINFORMATION.COM
Record low 0.365
2015 Canada Oat Plantings
NA oat market needs 15% increase MINIMUM Each 1% increase in yield or harvested area 40,000 MT of additional oat production New crop cash values favor oats over wheat at the moment No increase in oat area likely to see sub 0.500 MMT 15/16 end stock
OATINFORMATION.COM
OUCH!
Oat Spreads
OATINFORMATION.COM
CBOT Oat Spreads
-$0.25-$0.20-$0.15-$0.10-$0.05$0.00$0.05$0.10$0.15
Jul/1
4
Aug/
14
Aug/
14
Aug/
14
Sep/
14
Sep/
14
Oct
/14
Oct
/14
Nov
/14
Nov
/14
Dec/
14
Dec/
14
Jan/
15
Jan/
15
Feb/
15
Feb/
15
Mar
/15
$usb
u
Mar/May15Mar/May16Jul/Dec15
OATINFORMATION.COM
Lack of carry will reduce oat trade
Oat Spread Outlook
•Tight carry could remain if Canadian oat end stocks near forecasts •Lack of carry will limit Scan oat imports •Mpls/Duluth oat stock gains could slow
OATINFORMATION.COM
US Horse Demand
OATINFORMATION.COM
High Price of Oats a Negative
•Limiting demand in US horse markets •Rail issues are impacting horse demand and price relationships •Oats need to separate from other ingredients by finding “nutritional value” •Without horse demand, oat become “contracted” crop
OATINFORMATION.COM
Corn-Oat Cash Spread Toledo
$57
-$162
-$250
-$200
-$150
-$100
-$50
$0
$50
$100
$usp
mt
OATINFORMATION.COM
Oats a premium
Implied US Horse Demand for Oats
417
263
148
288 290 315
429 442
392
314
254
437
357 382
405 385
349
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15F 15/16F 5 yr avg
000
mt
OATINFORMATION.COM
Includes mill
demand
Europe Oat Situation
OATINFORMATION.COM
Europe Oat Area – Top Five Countries
200
400
600
800
1,000
1,200
1,400
000
Ha
OATINFORMATION.COM
5 yr avg 828
UK Oat Prices
27
16
20
4
£0£10£20£30£40£50£60£70£80
pmt
Bly-oatsWht-oats
OATINFORMATION.COM
Finland Oat Prices
34
50
2
13
-€ 10
€ 0
€ 10
€ 20
€ 30
€ 40
€ 50
€ 60
pmt Wheat - Oats
Feed Wheat - OatsBarley - Oats
OATINFORMATION.COM
-
1,000
2,000
3,000
4,000
5,000
6,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F
000
mt
Europe Oat Production- Major Countries
OATINFORMATION.COM
5 yr avg 3,384
Yield has large impact
Europe Oat Supply/Demand
OATINFORMATION.COM
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
0.9
1.0
1.0
1.1
1.1
1.2
1.2
05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16F
Feed
dem
and-
MM
T
Mill
ing –
MM
T
Milling
Feed
Europe Oat Supply/Demand
OATINFORMATION.COM
0.0
0.1
0.1
0.2
0.2
0.3
0.3
0.4
05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16F
MM
T Exports
EU Oat Prices-Major Countries
€ 100
€ 120
€ 140
€ 160
€ 180
€ 200
€ 220
€ 240
€ 260
Oct
/11
Dec/
11
Feb/
12
Apr/
12
Jun/
12
Aug/
12
Oct
/12
Dec/
12
Feb/
13Ap
r/13
Jun/
13
Aug/
13
Oct
/13
Dec/
13
Feb/
14Ap
r/14
Jun/
14
Aug/
14
Oct
/14
Dec/
14
Feb/
15
PMT
FinlandGermanUK
OATINFORMATION.COM
Oat Metrics
OATINFORMATION.COM
Cereal Sales Struggling
OATINFORMATION.COM
US Ready-to-Eat down 4% in 2014
NA hot cereal up 1.5% in 2014
NA Granola/muesli bars down 1.8% in 2014
What’s Driving Breakfast Cereal Markets •Shifting dynamics
•Health and Wellness •Convenience
OATINFORMATION.COM
Oat Cereals Ranked Well
The 10 biggest-selling brands of breakfast cereal 1. Honey Nut Cheerios 2. Frosted Flakes 3. Honey Bunches of Oats 4. Cheerios 5. Cinnamon Toast Crunch 6. Frosted Mini Wheats 7. Lucky Charms 8. Froot Loops 9. Raisin Bran 10. Rice Krispies
OATINFORMATION.COM
Source: Bakery and Snacks.com
CBOT Oat Futures – Continuous Weekly
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00Da
te07
/07/
2000
03/1
1/20
0002
/03/
2001
29/0
6/20
0126
/10/
2001
22/0
2/20
0221
/06/
2002
18/1
0/20
0214
/02/
2003
13/0
6/20
0310
/10/
2003
06/0
2/20
0404
/06/
2004
01/1
0/20
0428
/01/
2005
27/0
5/20
0523
/09/
2005
20/0
1/20
0619
/05/
2006
15/0
9/20
0612
/01/
2007
11/0
5/20
0707
/09/
2007
04/0
1/20
0802
/05/
2008
29/0
8/20
0826
/12/
2008
24/0
4/20
0921
/08/
2009
18/1
2/20
0916
/04/
2010
13/0
8/20
1010
/12/
2010
08/0
4/20
1105
/08/
2011
02/1
2/20
1130
/03/
2012
27/0
7/20
1223
/11/
2012
22/0
3/20
1319
/07/
2013
15/1
1/20
1314
/03/
2014
11/0
7/20
1407
/11/
2014
06/0
3/20
15
$usb
u
OATINFORMATION.COM
$3.50
$2.50
Minneapolis Milling Oat Basis Bids
0.00
0.20
0.40
0.60
0.80
1.00
1.20
$usb
u
OATINFORMATION.COM
Rising Cdn oat exports & US oat stocks
Rail Car Shortages
$.65
$.30 Avg $.23
Mpls/Duluth Oat Stocks
30,925
3,481
14,945
05,000
10,00015,00020,00025,00030,00035,00040,00045,000
000
bush
els
OATINFORMATION.COM
20-month high
OATINFORMATION.COM
Falling oat currencies making US oat imports cheaper
World Grain End Stocks
050,000
100,000150,000200,000250,000300,000350,000400,000450,000500,000
000
mt
OATINFORMATION.COM
5 yr avg
Will limit cereal price gains
The Source for Oat Information
OATINFORMATION.COM
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