Download - Canada Oat Outlook

Transcript
Page 1: Canada Oat Outlook

Canada OatOutlookCropsphere 2020

Oatinformation.com

Page 2: Canada Oat Outlook

What’s on Tap Today

• The oat outlook in fourslides

• Key oat metrics• What’s driving oat prices• Looking forward

Oatinformation.com

Page 3: Canada Oat Outlook

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.

Oatinformation.com

Page 4: Canada Oat Outlook

Four Slides Sums It All Up!

Oatinformation.com

Page 5: Canada Oat Outlook

Western Canada Oat Production

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1980

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

000

mt

Production

5 yr Moving Avg

Oatinformation.com

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

Page 6: Canada Oat Outlook

Total Canada Oat Supplies

2,500

3,000

3,500

4,000

4,500

5,000

5,500

87/8

8

88/8

9

89/9

0

90/9

1

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12/1

3

13/1

4

14/1

5

15/1

6

16/1

7

17/1

8

18/1

9

19/2

0F

000

mt

Oatinformation.com

11 year high11 year high

Page 7: Canada Oat Outlook

Canada Oat End Stocks

414

718 716

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12/1

3

13/1

4

14/1

5

15/1

6

16/1

7

17/1

8

18/1

9

19/2

0F

5yr

avg

000

mt

Enough to limit price gainsin 2019/20

Enough to limit price gainsin 2019/20

Oatinformation.com

2020-21expected to

climb to 0.800MMT

2020-21expected to

climb to 0.800MMT

Page 8: Canada Oat Outlook

Oatinformation.com

Unlikely to reach2018/19 highs

Unlikely to reach2018/19 highs

Saskatchewan spreadsat $.50 less

Saskatchewan spreadsat $.50 less

Page 9: Canada Oat Outlook

OK, Now I’ll Bore You with the Facts

Oatinformation.com

Page 10: Canada Oat Outlook

Key Oat Metrics

• Oat Use• Outside markets• Oat foods driving oat

markets

Oatinformation.com

Page 11: Canada Oat Outlook

Canadian Oat Use – 5 yr Average

Seed, 3%

Milling, 23%

Feed, waste, d'kge,24%

Exports, 50%

Oatinformation.com

Page 12: Canada Oat Outlook

Canada Oat Milling & Feed Use

600

700

800

900

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

Oatinformation.com

Feed use is residualFeed use is residual

Page 13: Canada Oat Outlook

Canadian Oat Exports – 5 yr Average

Overseas, 10%

US Horse, 18%

US Mill, 71%

Oatinformation.com

Page 14: Canada Oat Outlook

Oatinformation.com

32% 6%10%

17%21%4%

Where do Saskatchewan oats go to!Where do Saskatchewan oats go to!

Page 15: Canada Oat Outlook

Oatinformation.com

Where do Saskatchewan oats go to overseas!Where do Saskatchewan oats go to overseas!

Page 16: Canada Oat Outlook

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

Oatinformation.com

Solid product growthSolid product growth

Page 17: Canada Oat Outlook

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

51

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

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12/1

3

13/1

4

14/1

5

15/1

6

16/1

7

17/1

8

18/1

9

19/2

0

000

MT

Oats U.S. Milling Industry Oats Overseas Oats U.S. Horse Demand

Oatinformation.com

Current pace YTD suggestlower 2019/20 CY

exports

Page 18: Canada Oat Outlook

Canadian RawOat ExportForecast

1,7451,885

300

800

1,300

1,800

2,300

2,800

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

000

mt

Historical

Forecast

Oatinformation.com

Rising US Mill Demand isdriving exports

China remains thelong-term wild card

Page 19: Canada Oat Outlook

Canada Oat Product Exports

50

100

150

200

250

300

350

400

450

500

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12/1

3

13/1

4

14/1

5

15/1

6

16/1

7

17/1

8

18/1

9

19/2

0

000

mt

Oat products overseas*

Oat products to U.S.*

Oatinformation.com

Forecasted record high

Page 20: Canada Oat Outlook

Canadian OatProductExportForecast

461

565

100

150

200

250

300

350

400

450

500

550

600

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

000

mt

Historical

Forecast

Oatinformation.com

Again strong oat fooddemand driving product

exports

Page 21: Canada Oat Outlook

Canadian OatMilling

930

1,032

400

500

600

700

800

900

1,000

1,100

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

000

mt

Historical

Forecast

Oatinformation.com

Strong oat food demanddriving milling activity

Page 22: Canada Oat Outlook

Oatinformation.com

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%

Page 23: Canada Oat Outlook

Oat & GrainPrices

Oatinformation.com

Page 24: Canada Oat Outlook

Oat PriceDiscovery

Oatinformation.com

25 stations account for70% of deliveries

25 stations account for70% of deliveries

Page 25: Canada Oat Outlook

Two PrimaryRegions

Oatinformation.com

Western Canada Oat Deliveries – Top 25 Stations

Two small geographic regionsdominate oat deliveries

Two small geographic regionsdominate oat deliveries

Page 26: Canada Oat Outlook

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

Oatinformation.com

Funds/Spec DominatingFunds/Spec Dominating

Page 27: Canada Oat Outlook

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

Oatinformation.com

Correlation between cash andfutures is decent

Correlation between cash andfutures is decent

Page 28: Canada Oat Outlook

Oatinformation.com

Growers should belooking for $3.25 plus

Growers should belooking for $3.25 plus

Saskatchewan/Albertaspread at $.50 less

Saskatchewan/Albertaspread at $.50 less

Page 29: Canada Oat Outlook

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

Oatinformation.com

Page 30: Canada Oat Outlook

Oatinformation.com

Seasonal data points lowerprices into March

Seasonal data points lowerprices into March

Page 31: Canada Oat Outlook

Oatinformation.com

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

Page 32: Canada Oat Outlook

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

Oatinformation.com

Page 33: Canada Oat Outlook

$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

Oatinformation.com

Cereal prices trendingoff autumn lows

Cereal prices trendingoff autumn lows

Outside markets doimpact oat prices

Outside markets doimpact oat prices

Page 34: Canada Oat Outlook

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!

Oatinformation.com

Page 35: Canada Oat Outlook

Oatinformation.com

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%

Page 36: Canada Oat Outlook

In SummaryBright future for oats!

Oatinformation.com

Page 37: Canada Oat Outlook

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

Oatinformation.com

Page 38: Canada Oat Outlook

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

Oatinformation.com

Page 39: Canada Oat Outlook

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

Oatinformation.com

Page 40: Canada Oat Outlook

The Source forOat

Information

• Oatinformation.com• Twitter: @Oatinformation• [email protected]

Oatinformation.com

Page 41: Canada Oat Outlook

Oat Report With a Focus for Canadian Growers

Oatinformation.com

Page 42: Canada Oat Outlook

Grower OatReport• Oatinformation.com/grower

• Published twice monthly, plusspecial oat reports impacting yourmarket.

• Focus on price discovery

• CDN $200 per year

Oatinformation.com


Top Related