Oat

Oats, also known as common oat, is a type of cereal grain which is grown for its seed. It’s two most common uses are consumption for humans and feed for livestock.  North America holds the major market share of oats where companies like the Quaker and Pepsico launched a number of varieties of wholesome crunch granola, warm & crunchy, and some other varieties of the grain. The 2018 data suggests the global stocks were at 2.71 mmt, second lowest since 1960, due to dry weather conditions in Europe.

China’s imports grew 28 per cent per annum where the total import for 2019 is predicted at 150,000 mmt, almost 70 per cent down as compared to the last year. Australian output declined 23 per cent to 29.3 mmt, and Canadian exports grew 5.5 per cent y-o-y. It is a type of cereal grown for its seed. It is a spring and early summer crop where 50% of harvests are used for hay, with the other half being used for grains. It is used as snacks or staple food by the humans and the Asia Pacific region is the key market where increasing population and changes in lifestyle are boosting growth.

The trade disagreement between the US and China resulted in the escalation of tariffs on imports, where planting of the crop in the US declined for Q1 and Q2, 2019. Only 50 per cent of the crop was planted and it was 22 per cent behind the normal.  The prices gained since September 2018 due to harvest difficulties in Western Canada where produce declined and supply pressures increased by almost 91 percent due to higher demand from the US buyers. Australia and EU draught resulted in stressful harvests and mid-September price was 5 years high to $3.05 CAD per bushel on October 25.  The prices are 20 to 25 percent higher than last year, where the demand for oatmilk increased significantly creating a shortage in grocery stores and coffee shops in the US.

In November 2018, Germany announced to implement a ban on glyphosate and now, the buyers are not accepting glyphosate sprayed oats. It is a chemical that created public fallout amidst souring sentiments in the markets.    

In 2018-19, China produced the same as the previous year -500,000 tonnes and is expected to import 280,000 tonnes, down 419,000 tonnes from the year before.

The grain is, commonly, rolled or crushed or grounded into fine oat flour and eaten in the form of porridge, but it can also be used in various baked goods. It is a key ingredient of cold foods such as muesli and granola. It was first manufactured in Britain in 1899 where the first bread factory based on the grain was established. In Scotland, it has high esteem as a foundation national diet. It can be used to make soups thicker similar to barley and rice. It is also used to feed horses to give them an extra boost of energy. It can be crushed, rolled or crimped for horses making it easier for them to digest or can be fed whole. Cattles are also fed the coarse flour using a roller mill, burr mill or hammer mill.

Due to commodity contracts being customised, each price movement has its own value. A one cent movement in the price is almost equal to $50 in the contract. When determining the CBOT’s oats profits and loss figures, the investor has to analyze the difference between the contracts and exit price, and then multiply the results by $50. Key players are Nature’s Path Foods Inc., Kellogg NA Co., World Finer Foods Inc., La Crosse Milling Company, Cargill Incorporated, and World Finer Foods Inc.