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Agenda
• Current Weather Impacts
• US Supply and Demand Trends
• Canadian Supply and Demand Trends
• Big”4” Supply and Demand Trends
• Current and Historical Prices
• Forward Trends in Oat Milling
Developing drought in US and Canada could impact production
U.S. Oat Production
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1000000
0 m
etri
c to
nsUS oat production declined, feed use fell, and acreage shifted North to Canada
Govt. programs favors beans & cornResearch developed earlier varieties
Stable production since 1999Last 5 yr avg. = 1765 mmt
(122 million bushes)
U.S. Oat Imports
0
200
400
600
800
1000
1200
1400
1600
1800
2000
000
met
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s
U.S. Imports rose as production declined
75% of Imports come from Canada25% from the Scandinavian Countries
Declining imports are due to US feed use down 26% (777mmt’s) since 2000
Canadian Oats - Production(000 MT.)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,00090
/91
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
000
met
ric
ton
s
Current New Crop Forecast
potential if dryness continues
Canadian Oats - Exports (000 MT.)
0
200
400
600
800
1,000
1,200
1,400
1,60090
/91
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
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02/0
3
03/0
4
04/0
5
05/0
6
06/0
7
000
met
ric to
nsApprox. 75 % of Canadian exports go to the US
Low production years
What drives feed use ?•Quality of oats•Price of oats compared to other feed grains
-- barley, wheat, and corn
Total North American oat feed use
2,0003,0004,0005,0006,0007,0008,0009,000
North American
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
MM
T's
Total demand for Oats in the Big “4” has declined 27% since 1990rising food, seed, and export demand has not off-set declining feed use
Feed : down 4790 MMt’s or 45%Food and seed: up 355 MMT’s or 20%Trade : up 400 MMT’s or 28%
Total Oats Supply in the Big"4"
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
Crop Years
MM
T's
Since 1990 production is down 38% or 4123 MMT’s ( 290 mill bushels)
“ B ig F o u r” O a t S u p p ly & D e m a n d
000 mt"BIG FOUR"
Area Harvested Yield (kg/ha)
Opening Stocks ProductionImportsTotal Supply
Milling/SeedFeedExportsTotal Usage
Ending stocksStocks - Use %
S TATCO M Estim a te00/01 01/02 02/03 03/04 04/05 05/06 06/07
2,932 2,704 2,967 3172 2591 2599 27532.77 2.46 2.43 2.57 2.82 2.66 2.73
2,538 2,273 1,620 1,624 2,023 2,113 1,8618,126 6,644 7,204 8,167 7,297 6,917 7,5261,777 1,707 1,661 1,578 1,539 1,520 1,370
12,441 10,625 10,485 11,368 10,859 10,550 10,757
1,718 1,928 1,936 1,942 1,995 2,045 2,0906,104 5,317 5,089 5,447 4,950 4,950 4,7902,348 1,759 1,837 1,956 1,801 1,694 1,794
10,169 9,004 8,861 9,345 8,746 8,689 8,674
2,272 1,620 1,624 2,023 2,113 1,861 2,08322.3% 18.0% 18.3% 21.6% 24.2% 21.4% 24.0%
Long-Term oat prices in cents/bushel
World wide crop problems in most grains
Poor growing conditions and low production
Speculative fund interest and developing dry conditions.
FundamentalTrading range for 06/07
1.60
2.15
Crop Year Average Oat Prices
1.80
1.51
1.06
1.74
1.20
1.77
1.38
1.25
1.761.76
1.61
2.072.06
1.501.50
1.77
2.031.94
2.02
2.33
1.34
1.38
1.321.25 1.13
1.13
1.46
0.95
1.15
1.35
1.55
1.75
1.95
2.15
2.35
2.551 3 5 7 9 11 13 15 17 19 21 23 25 27
Crop Years 1980 - 2006
$/ B
ushe
l
1980 Drought
1988 Drought
1995 Global Commodity Inflation
Current forward market for 2006
Avg. price since 1980 = 1.58/ bushel
2001 production down 20%
Oat Market Trends
• Total supplies have trended lower since 1990 but have stabilized in past 5 years
•Feed demand continues to decline and has been trending lower the past 5 years
•Milling Capacity has increased by an estimated 7 mill bushels from 2000 - 2005 and is estimated to increase by another 10 mill bushels by 2007.
-- majority of the growth is by industrial millers-- total N.AM milling capacity will be an estimated 125 million bushels by 2007
•Limited availability of “peak capacities” have left some consumer demand unfilled --new capacities will allow product companies to increase offerings.• Over the past five years growth in conventional oats for food has been 2-4% and organic oats about 15-20% /yea -- combined growth has been approx. 4% -6% / yr -- organic will continue to grow faster than conventional
Supply Trends
Demand Trends
Milling and Food Trends
•Over the next five years combined organic and conventional growth is expected to be 5%/yr ( +/- 2%)
•Key market segments for growth are convenient, portable consumer products driven by increased demand for healthy food products
-- bars, snacks, healthy whole grain and multi-grain blends
•Back to back years of poor oat quality and poor growing conditions
•Acreage expansion and decline will be determined by oat prices. These prices will be strongly influenced by bio- diesel and ethanol as corn and beans compete for these acres
• Milling market growth 5% /year will be a key driver of oat prices. This food demand is basically [price] inelastic as opposed to [price]elastic feed demand
Oat Market Trends
Milling and Food Trends cont…
Considerations going forward