Oat price outlook improves

432

Source: Government of Alberta

On June 28, Statistics Canada released its updated 2023 Canadian crop acreage estimates. Among the farmer survey-based numbers was a reduction from earlier estimated Canadian oat acreage of 3.057 million acres to 2.537 million acres.

“Oat prices have dropped sharply from the record prices of a year ago, resulting in a producer reaction to reduced oat acreage,” says Neil Blue, provincial crops market analyst with the Alberta government. “If the updated acreage estimate is proven out and, depending on the weather-dependent oat yield, the result could be price supportive to oats for the next crop year.”

In its most recent June projection, Agriculture Canada had estimated Canadian oat ending stocks at August 1, 2023 of 1.25 million tonnes, up sharply from the tight 333,000 tonnes as of July 31, 2022. Using the recent 3-year average of oat acreage harvested as grain at 85% of seeded acreage, oat harvested acreage would be about 2.16 million acres.

Applying Agriculture Canada’s June forecast 2023 oat yield of 1.428 tonnes/acre (92 bu./acre), Canada’s 2023 oat production would total 3.1 million tonnes. That compares to the June production estimate of 3.64 million tonnes.

“Prior to the Statistics Canada 2023 oat acreage update, Agriculture Canada had estimated 2023-2024 crop year oat ending stocks at one million tonnes, still likely to be price restrictive,” explains Blue.

However, considering the revised oat acreage, if the 2023-2024 demand estimate of 3.9 million tonnes is realized, Canadian oat carryover could drop down to 500,000 tonnes at the end of July 2024.

“Considering weather challenges across the Prairies this year, there is uncertainty of 2023 oat yields achieving the 1.4 tonne/acre (92 bu./acre) level. On the demand side, at the discounted price of oats compared to other feed grains, significant oat volumes are still being fed. In addition, 2023 U.S. oat acreage was reduced. Despite the higher-than-expected 2023 U.S. corn acreage potentially leading to greater feedgrain supply, the oat price outlook is more positive for the next crop year,” says Blue.