Oats

Oats are seeds or grains of a genus of plants that thrive in cool, moist climates. There are about 25 species of oats that grow worldwide in the cooler temperate regions. The oldest known cultivated oats were found inside caves in Switzerland and are believed to be from the Bronze Age. Oats are usually sown in early spring and harvested in mid to late summer, but in southern regions of the northern hemisphere, they may be sown in the fall. Oats are used in many processed foods such as flour, livestock feed, and furfural, a chemical used as a solvent in various refining industries. Oat futures and options are traded on the Chicago Board of Trade (CBOT) and the Winnipeg Commodity Exchange (WCE).

Prices – Oat prices on the CBOT weekly nearest futures chart started the year near .18 per bushel, but then fell sharply in the first half of the year to post a 2-1/2 year low of .23 per bushel in late July. Oat prices then traded sideways in a narrow range between about .30-.50 through the remainder of the year, with an upturn at the end of the year producing a close for 2003 of .52, a 6-month high. Prices were pressured early in the year by predictions of a large US crop harvest, lower US consumption figures, and lower export demand. However, prices recovered later in the year on short-covering, some foreign buying, and the weak dollar.

Supply – World oat production in 2003/4 (June/May) was forecast at 26.848 million metric tons, up 4.6% from 25.660 million in 2002/3 but down from 27.096 million in 2001/2. World ending stocks for 2003/4 are forecasted at 4.026 million metric tons, up from 3.376 million in 2002/3. The world’s largest oat producing countries in 2002/3 were the European Union with 7.228 million metric tons of production (28% of world production), Russia with 5.700 million (22%), Canada with 2.911 million (11%), and the US coming in fourth with 1.722 million metric tons (7%). US production of oats in 2003/4 was forecast at 2.100 million metric tons, up 22% from 1.722 million in 2002/3 and by an overall 24% from 1.699 million in 2001/2. US ending stocks for 2003/4 are forecasted at 1.081 million metric tons, up sharply from 723,000 in 2002/3. US farmers planted 4.601 million acres with oats in 2003/4, down from 4.995 million in 2002/3, but acres harvested rose to 2.224 million acres in 2003/4 from 2.093 million. Yields rose sharply in 2003 to 65.0 bushels per acre from 56.7 bushels in 2002/3. The largest US oat-producing states in 2003 were North Dakota (with 15% of US production), Minnesota (13%), South Dakota (10.8%), and Wisconsin (10.7%).

Demand – World consumption of oats in 2003/4 was forecast at 26.198 million metric tons, down slightly from 26.226 million in 2002/3. The fact that consumption is lower than production suggests an oversupply of oats, a bearish factor for oat prices.

Trade – Most of the world's oats production is consumed domestically and world trade is small at only 7% of overall world production. World trade in oats in 2003/4 was forecast to rise to 26.848 million metric tons from 25.660 million in 2002/3. The world’s largest oat exporters are Canada with 1.057 million metric tons in 2002/3 and the European Union with 800,000 metric tons. The world’s largest importer is the US with 1.777 million metric tons, with most of those oats coming from Canada.