Canada Oat Outlook
Transcript of Canada Oat Outlook
Canada OatOutlookCropsphere 2020
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What’s on Tap Today
• The oat outlook in fourslides
• Key oat metrics• What’s driving oat prices• Looking forward
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Saskatchewan is the Center of the Oat World
• Largest oat producing province inCanada at a 54% share, WesternCanada 61%.
• Single largest global oat productionregion. Only the entire country ofRussia is a larger producer.
• Saskatchewn accounts for;• 60% of Canada’s raw oat exports.
• Exports 3 times more oats than the 2ndlargest global exporter Finland.
• 50% of oat product exports.• The major global price discovery
point.• Drives the bulk of CBOT oat hedging.
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Four Slides Sums It All Up!
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Western Canada Oat Production
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
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2019
000
mt
Production
5 yr Moving Avg
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Benefited from well abovetrendline yields
Benefited from well abovetrendline yields
2019 production 4th highest inthe past 40 years
2019 production 4th highest inthe past 40 years
Total Canada Oat Supplies
2,500
3,000
3,500
4,000
4,500
5,000
5,500
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11 year high11 year high
Canada Oat End Stocks
414
718 716
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600
800
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5yr
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mt
Enough to limit price gainsin 2019/20
Enough to limit price gainsin 2019/20
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2020-21expected to
climb to 0.800MMT
2020-21expected to
climb to 0.800MMT
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Unlikely to reach2018/19 highs
Unlikely to reach2018/19 highs
Saskatchewan spreadsat $.50 less
Saskatchewan spreadsat $.50 less
OK, Now I’ll Bore You with the Facts
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Key Oat Metrics
• Oat Use• Outside markets• Oat foods driving oat
markets
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Canadian Oat Use – 5 yr Average
Seed, 3%
Milling, 23%
Feed, waste, d'kge,24%
Exports, 50%
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Canada Oat Milling & Feed Use
600
700
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1,000
1,100
1,200
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20F
000
MT
Mill Use
Feed Use
Mill use is the primarydriver of oat prices,
climbing at a rate of 3.3%annually
Mill use is the primarydriver of oat prices,
climbing at a rate of 3.3%annually
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Feed use is residualFeed use is residual
Canadian Oat Exports – 5 yr Average
Overseas, 10%
US Horse, 18%
US Mill, 71%
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32% 6%10%
17%21%4%
Where do Saskatchewan oats go to!Where do Saskatchewan oats go to!
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Where do Saskatchewan oats go to overseas!Where do Saskatchewan oats go to overseas!
Growth Canada Oat and Oat Products Exports
3.5%
8.5%
4.1%
-1.1%
16.1%
-12.0%
-2.0%
-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
Oat products to U.S.*
Oat products overseas*
Total oat products
Oats U.S. Milling Industry
Oats Overseas
Oats U.S. Horse Demand
Total raw oats
5 Year CAGR
Prior
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Solid product growthSolid product growth
Canada Oat Exports
1,006768 714 887 938 1,024
1,241
1,7491,470
1,171 1,068 1,212 1,192 1,242 1,306 1,147 1,255 1,1981,013 980
56
57 5755 53 57
56
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54
4155
93 62 40 88195 130 152
304 280401
254148
288 290307
427
442
392
312252
433352 380 303
228 257 282 428 435
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Oats U.S. Milling Industry Oats Overseas Oats U.S. Horse Demand
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Current pace YTD suggestlower 2019/20 CY
exports
Canadian RawOat ExportForecast
1,7451,885
300
800
1,300
1,800
2,300
2,800
2001
2003
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2019
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mt
Historical
Forecast
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Rising US Mill Demand isdriving exports
China remains thelong-term wild card
Canada Oat Product Exports
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Oat products overseas*
Oat products to U.S.*
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Forecasted record high
Canadian OatProductExportForecast
461
565
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2025
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mt
Historical
Forecast
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Again strong oat fooddemand driving product
exports
Canadian OatMilling
930
1,032
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1,000
1,100
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Historical
Forecast
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Strong oat food demanddriving milling activity
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Canada Oat Supply & Use
(000 mt) 15/16 16/17 17/18 18/19 19/20F 20/2119/20 vs
18/1920/21 vs
19/20 5 yr avg2019/20 chge
from avg 5 yr CAGR Dec Jan Jan
Harvested ha. (000) 1,048 925 1,052 1,005 1,158 1,160 1,214 15.4% 4.7% 1,038 11.7% 1.4% ac. (000) 2,590 2,285 2,599 2,483 2,862 2,866 3,000 15.4% 4.7% 2,565 11.7% 1.4%Yield mt/ha 3.27 3.49 3.55 3.42 3.41 3.59 3.38 4.9% -5.7% 3.46 3.5% 1.5% bu/ac 85.8 91.7 93.1 89.7 89.6 94.1 88.7 4.9% -5.7% 90.9 3.5% 1.5%
Opening Stocks 699 966 703 778 414 414 718 -46.7% 73.3% 712 -41.8% -6.1%Production 3,427 3,231 3,732 3,435 3,954 4,159 4,104 21.1% -1.3% 3,597 15.6% 2.9%Imports 19 21 14 10 15 15 15 47.1% 0.0% 16 -5.2% -12.0% Total Supply 4,145 4,218 4,448 4,223 4,383 4,588 4,837 8.6% 5.4% 4,324 6.1% 0.8%
Food, Seed, Enrg/Other 943 897 952 1,038 1,100 1,070 1,140 3.1% 6.5% 980 9.2% 3.0% Seed 97 108 103 121 140 140 140 15.6% 0.0% 114 23.2% 1.3% Milling 847 790 849 917 960 930 1,000 1.5% 7.5% 866 7.4% 3.3% Energy/Others - - - - - - - 0.0% 0.0% - 0.0%Feed, waste, d'kge 664 978 1,088 1,003 1,000 1,100 1,200 9.7% 9.1% 966 13.8% 5.3%Exports 1,571 1,641 1,631 1,768 1,700 1,700 1,700 -3.8% 0.0% 1,662 2.3% 0.8% Total Usage 3,179 3,516 3,671 3,809 3,800 3,870 4,040 1.6% 4.4% 3,609 7.2% 2.5%
Ending Stocks 966 703 778 414 583 718 797 73.3% 11.0% 716 0.3% -9.9%
Stocks to Usage % 30% 20% 21% 11% 15% 19% 20% 70.5% 6.3% 20% -8.2% -12.1%
Oat & GrainPrices
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Oat PriceDiscovery
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25 stations account for70% of deliveries
25 stations account for70% of deliveries
Two PrimaryRegions
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Western Canada Oat Deliveries – Top 25 Stations
Two small geographic regionsdominate oat deliveries
Two small geographic regionsdominate oat deliveries
Monthly CBOT Oats
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
07/2007 07/2008 07/2009 07/2010 07/2011 07/2012 07/2013 07/2014 07/2015 07/2016 07/2017 07/2018 07/2019
$usb
u
Forecasted range movingforward $2.75 to $3.50, outside
of this range will be tied tooutside markets
Forecasted range movingforward $2.75 to $3.50, outside
of this range will be tied tooutside markets
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Funds/Spec DominatingFunds/Spec Dominating
y = 0.9399x + 0.6263R² = 0.7126
2.000
2.200
2.400
2.600
2.800
3.000
3.200
3.400
1.80 1.90 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70
2 Year Coorelation Cash Oat Prices & CBOT Oat Futures
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Correlation between cash andfutures is decent
Correlation between cash andfutures is decent
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Growers should belooking for $3.25 plus
Growers should belooking for $3.25 plus
Saskatchewan/Albertaspread at $.50 less
Saskatchewan/Albertaspread at $.50 less
Manitoba Grower Oat Price Range
0.460.41
1.41
1.64
1.37
1.13 1.10
0.80
0.92
0.45
0.580.65
0.81
0.35
0.95
0.620.57
0.82
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 5 yr avg 10 yravg
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Seasonal data points lowerprices into March
Seasonal data points lowerprices into March
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General rule of thumb is oatsneed to be 50% or better ofwheat value to buy oat acres
General rule of thumb is oatsneed to be 50% or better ofwheat value to buy oat acres
Current data suggests higher oatplantings in 2020
Current data suggests higher oatplantings in 2020
Canadian Grower Sell Recommendations - Oats
Trading ranges
• Old Crop Range:• Sask/Alberta $3.00-3.75• Manitoba $3.25-$4.00
• New Crop:• Sask/Alberta $2.75-3.25• Manitoba $3.25-$3.75
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$1.50
$2.50
$3.50
$4.50
$5.50
$6.50Ja
n-18
Feb-
18
Mar
-18
Apr-
18
May
-18
Jun-
18
Jul-1
8
Aug-
18
Sep-
18
Oct
-18
Nov
-18
Dec-
18
Jan-
19
Feb-
19
Mar
-19
Apr-
19
May
-19
Jun-
19
Jul-1
9
Aug-
19
Sep-
19
Oct
-19
Nov
-19
Dec-
19
Jan-
20
$usb
u
US Cereal Futures Comparison
Corn
Oats
MGE Wheat
CBOT Wheat
KC Wheat
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Cereal prices trendingoff autumn lows
Cereal prices trendingoff autumn lows
Outside markets doimpact oat prices
Outside markets doimpact oat prices
Pricing Dynamics
• Oat foods continue drive oat demandand production.
• Oat continue to move towards “specialcrop” status means increasedcontracting directly with growers
• CBOT oats still becoming irrelevant!
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2.7
-0.7
0.7
-1.1
2.0
0.0
2.4
-0.8
-1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0
SNACK BARS
BREAKFAST CEREALS
HOT CEREALS
RTE CEREALS
%A
nnua
lGro
wth
North America Growth - 5-yr CAGRMajor Food Categories Containing Oats
Forecast CAGR%
Historic CAGR%
In SummaryBright future for oats!
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Best Bets MovingForward
• Higher 2020 oat plantings?• Good net returns for oats,
particularly against wheat.• This will depress prices longer.
• Oat prices will not reach 2018/19highs
• Canadian oat supplies at 11-year high• Quality issues may be wild card
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Best Bets MovingForward
• China not in near term future for Canada,lack of protocol.
• Strong likelihood of new mill capacity-Paterson Global Foods.
• Domestic oat mill demand and productexports record high.
• Raw oat Exports down slightly• Horse demand strong but will slow• US mill demand steady
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Changing Oat MarketDynamics
• Edging towards becoming a specialcrop.
• Increased focus on Gluten-Free/Organic
• Increased flat price buying.• Glyphosate use an issue.• Sustainability, Accountability,
Traceability & Regenerative!• Consumers will dictate what farmers
will grow
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The Source forOat
Information
• Oatinformation.com• Twitter: @Oatinformation• [email protected]
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Oat Report With a Focus for Canadian Growers
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Grower OatReport• Oatinformation.com/grower
• Published twice monthly, plusspecial oat reports impacting yourmarket.
• Focus on price discovery
• CDN $200 per year
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