Oat Market Outlook

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Oat Market Outlook

• Prairie Oat Growers Assocation
• November 22, 2009
• Randy Strychar

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Current Situation

• CBOT oat futures near 20 year highs
• Cash oat prices off crop year highs
• Relationship between futures and cash distorted
• Cash oat markets in relative balance
• Corn the price leader for oats
• Oat supply is chasing demand
• World grain and coarse grain balances tight

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Whats driving oat prices

• Funds continue to dominate oat pit
• Energy prices impacting grain markets
• Crude oil
• Ethanol
• Canadian Dollar

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Monthly CBOT Oats

• Continuous Monthly CBOT Oats

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Nearby CBOT weekly close
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Continuous Weekly Can-Oat Bid
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Seasonal CBOT oat price trends
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Cash basis levels under pressure
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Canadian Oat Production

• Highest production in 27 years
• Manitoba record high good quality crop
• Lower than expected quality in Saskatchewan but
  huge crop
• More than enough oats to meet commercial demand

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Manitoba/Sask Production up

• 27-year high production
• Major driver of CBOT oats
• Regions supports five oat mills - 90 of exports
• Bulk of milling oat exports from this region

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Canadian Oat Use

• Average use 2.4 mmt
• 07/08 raw oat exports forecast down 13
• U.S. feed demand down as oat prices too high
  relative to other feed grains
• Milling use forecast up down 2
• One mill down
• Expansion at another

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Canadian Oat Ending Stocks
27 year high
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Canadian Oat Ending Stocks

• 07/08 forecast up 120
• 27-year high
• Oat supplies up more than 800,000 mt
• On-farm feed use sharply higher
• Price may hold steady but demand is fairly
  inelastic
• No off-shore feed demand

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U.S. oat imports

• 07/08 forecast mostly steady
• Feed demand down to a 10-year low
• Mill demand up slightly
• Unlikely any Scans

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Scandinavian oat production

• Up 30
• Quality average to above
• Most exports will remain in Europe
• No subsidy will be granted this year
• EU keeps import tariff
• Overall trends continue to lower oat production
• A non threat to Canada

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The good and not so good news
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Can-Oat Portage Price Trends
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Grain Millers, Yorkton Price Trends
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The major threat for oat growers

• 800,000 surplus

2.5 mmt commercial demand
Higher end stocks
More fed on-farms
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Monthly CBOT corn/oat spread - mt
Range need to increase feed use
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Cash oat/barley spread
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Canadian Dollar Crude Oil
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Things to watch for in the oat market

• Crude oil prices
• Fund activity
• Canadian Dollar
• CBOT corn/oat spread
• CWB barley monoply
• US Canadian mills covered into end of March
• Supply will chase demand change from past six
  years where growers were in control of

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Price outlook

• Manitoba 2.50 - 3.00
• Saskatchewan 2.40 - 2.90
• Alberta 2.30 - 2.75
• New crop 2008 bids at or above 2007
• CBOT oat futures steady to lower
• Could lag corn
• Corn the price leader
• Cash basis levels will remain under pressure

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Looking to 2008

• Oat prices have fallen relative to other crops
• New crop bids up .15 to .20 vs. 2007
• Large opening stocks
• 2008 Canadian oat area down 7 to 10
• Production drop of 800,000 mt
• Ending stocks of 1.00 mmt
• Commercial demand mostly steady at 2.4 mmt

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How to get the best price for your oats

• Trust no one source and do your home work
• Understanding supply and demand
• Track markets, futures, cash, oats corn
• Look at seasonal trends

• Marketing plan, change it if you need to, but
  have one
• Understand markets are constantly changing, be
  flexible

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