Among All Grain Shortages, Oats Crops and Supply Situation Looks Particularly Alarming

CBOT December Oats futures prices are creeping up higher and higher to all-time contract highs. Oat futures prices have moved sharply higher recently, adding almost 60% over the past quarter, sparked by the smaller grain crops in general aggravated by low inventories that fueled increased global demand. The average yield is pegged at 61.3 bushels per acre, compared to 65 last year, with harvested area falling to 650,000 acres, implying abandonment of almost 2 million acres.

The U.S. Department of Agriculture, USDA, recently reported that crippling droughts in North America have cut U.S. oat production by a whopping 40% and exports from America’s main supplier Canada are expected to be cut in half from last year, falling to their lowest levels since 2010.

The Canadian oat situation poses unique challenges for U.S. buyers for the 2021/22 crop year. As the world’s largest oat producer and exporter, Canada’s oat production heavily impacts global trade patterns, and this year its crop shrunk 44%, bringing projected end-of-year stockpiles to just 268,000 tons, a record low. That’s down 60% YoY – about the same as oat futures rose recently (see above). So the main question is whether the latter still comprise the future upside potential.

Back on September 30 this year, the USDA reported the 2021 American oat crop was the smallest on record at 39.836 million bushels, 39% less than in 2020. That was due to decreased planting across the oat-growing region, either due to weather or producers switching to more profitable crops. Likewise, fast forward on Monday, USDA reported export inspections of U.S. corn in the week ended Sept. 21 at 545,127 tons, down nearly 20% from the same period a year earlier and well below the range of trader expectations.