KANSAS CITY – Faced with unprecedented demand amid record low supplies, trade has an exceptionally high outlook for the 2022 oat crop. But the North American late-seed crop, bewildering government crop status reports, and macroeconomic effects pressing down grain prices make things worse. A bit chaotic for the oat market.
“It’s like trying to nail a gel to a wall,” said Randy Streicher, president of Oatinformation.com. “It looks like we can’t get a good understanding of what’s going on because there are a lot of unknowns right now in the oats market. Grain prices have gone down, you have uncertainty about acreage numbers, there’s a mixed set of crop conditions, and we have oat balance sheets that don’t reflect what We see it in the oat price crash, so we’re all over the place now.”
Demand for oats, driven largely by the non-dairy beverage and gluten-free snack industries, has outpaced production especially after North American oat-growing regions suffered a severe drought last year, depleting supplies that couldn’t keep up with use. But last winter’s thick masses of ice across the western Canadian Prairies, where most food grade oats are grown, provided a foundation of much-needed moisture and paved the way for the oats market’s revival.
Statistics Canada’s July 5 report said Canadian farmers increased their acres planted with oats by 16% to 4 million acres, compared to 3.4 million acres in 2021. Strychar said acreage data could be misleading.
“The problem is that we’ve had such severe delays in our cultivation that it’s hard to deal with what’s already gone into the land, and I’m hard-pressed to find anyone in the oats industry who thinks the 16% increase predicted by Stats Canada,” said Mr. Streichar.
The area report only shows what farmers intend to sow, but a better estimate of the true seed numbers won’t be known until Statistics Canada releases its first production and production estimates at the end of August.
Mr. Streicher also said he felt the USDA oat numbers were deceptive. In its July 12 World Agricultural Supply and Demand Estimates report, the USDA raised the expected yield for 2022 while lowering estimates for both the area classified for oats and the area expected to be harvested. The USDA in its July 12 Crop Production Report projected 2022 U.S. oats production at 52,613,000 buses, 32% more than the 2021 drought-reduced crop, with an average yield of 66.1 buses per acre, up 8% for the year 2021.
“The above-average yield for the US crop is strange because they have the same problem as the Canadian crops; they have gone late and are in a lot of heat at the moment,” Mr. Streichar said.
In general, the North American crop looks very good. But Mr. Streicher cautioned that late planting often exposes the oat crop to a devastating combination of harsh summer heat during periods of vital crop growth and early frosts, which can cause widespread damage before the crop is ready for harvest. In addition, late planting often leads to lower yields.
But Mr Streicher said recovery from last year’s drought was still possible, but it might not be a full recovery.
“We only have the crop in the ground for 30 days, it’s a 95-day crop, and we have some critical growth periods ahead,” said Mr. Strychar.
Meanwhile, Mr. Streicher advised buyers to take advantage of lower oat prices. Despite tight supplies and unusual demand, oat values tend to follow other cereal crops, which have recently been pressured by recession fears and diminished export demand due to a stronger United States dollar.
“I would tell the end user to get some coverage, at least a third of what is needed now because these are good prices,” said Mr. Streichar.