MARCO ISLAND, FLA. —Unprecedented growth, short-term headwinds and a strong long-term outlook characterize the global oat market of 2024.

That was the 30,000-foot view presented to millers attending the North American Millers’ Association spring conference this month in Florida. Handling the comprehensive breakdown of the oats market was Randy Strychar, president of Oatinformation, whose view of the market is backed by four decades as a trader, marketing manager, broker and market analyst in the oat industry.

Strychar outlined an oat market that “has seen dramatic growth over the past few years, certainly unprecedented. In the 40 years I’ve been in the industry, I’ve never seen anything like this. Volume increases have been a major factor in this growth and so has been rising perception of the positive value of oats in the minds of consumers, and by far that the most important element.”

Short-term headwinds

Coming into 2024, the global oat and oat product trading volume has seen a significant slowdown, declining 5% to 12% in almost every region in the world, Strychar said. The slowdown has been more prominent in breakfast cereals and snack bars than in oat milk, which has been mostly steady, he said. At the same time, global oat supplies are near record lows. Canadian oat stocks are closer to the record low than to the average carryover, and there are crop problems in Europe and Australia. As a result, there is no cushion carried into the 2024-25 crop year, Strychar said, and wheat, corn and barley price trends that have kept a lid on the oat market are beginning to pressure oat prices lower.

“As we move forward, they are beginning now to apply pressure to oat prices,” Strychar said. “We’ve begun to see them slide off the highs in Europe. In Canada they’re moving off the highs for about 8 to 10 weeks. Global economies are recovering slowly and projections are pretty good. Large increases in oat area are expected in Canada, higher area in the EU, UK and Australia is looking at marginal gains as they seed this spring.”

Continued slowing in food inflation would be good news for oat-based foods and beverages, he said, noting recent trends have seen consumers purchase more private label and cheaper brands.

Oat milling markets

Strychar outlined the nature of the world’s six major oat milling markets and the “143 oat mills in the world that we know of” at Oatinformation.

“We do our best to track a lot of data around the world, but the oat markets are shrouded from secrecy,” he said. “It’s a lot of detective work, an ongoing process, so what I’m trying to do is give a point of reference and a place to start a conversation and dialogue.”

Oatinformation estimates 7.9 million tonnes of world milling capacity, including conventional, gluten-free and organic oats.

“The problem is, that’s a moving target,” he said. “Some mills go out of business, they contract, they get bought, there are expansions that we don’t always know, so this is a pretty good benchmark, but we do try to back into this number by looking at other elements and other data.”

Some of Oatinformation’s data:

• North America has 33 oat mills, by far the largest in the world, with total capacity of about 2.7 million tonnes, Strychar said. US oat milling capacity is currently larger than Canada. Strychar cautioned that his company may be understating mill capacity by 10% to 15% as mill contractions and expansions aren’t always public knowledge.
• Australia has 22 oat mills, with an estimated capacity at about 1.3 million tonnes, Strychar said. “Fortunate for them, they have access to the largest potential consumer growth market for foods and beverages in the world,” he said. “The Asian market, the Middle East has the highest concentration of celiac disease in the world. When you look at things like gluten-free items and oat milk, that’s why you’re seeing more and more growth there. Australia dominates that market right now, but we are seeing some pretty strong and rapid growth coming out of China and Russia.”
• The European oats market has 42 mills with an estimated capacity of about 2.4 million tonnes and includes emerging markets coming out of Spain, Scandinavia and the Baltic States. “We’re seeing a changing of the guard going on, some shifts going on,” Strychar said.
• With 22 oat mills, the South American market has a total capacity about 700,000 tonnes. Brazil and Argentina have oat mills, but Chile dominates the market and is the second largest exporter of oat products in the world behind Canada. “For a country that produces a fraction of the production of Canada, it’s quite astounding,” Strychar said. “It’s amazing what they’ve done in that market I have to take my hat off to them.”

Global use forecast

Global oats production has dropped off its record high but “we’re going to see recovery into 2030,” Strychar said. “The only thing I can see us falling off the rails is if something happens to food demand again. It’s what drives milling capacity. If for some reason the consumers simply stopped using oats for whatever reason they can come up with.”

North American milling use of oats was down about 12%, Strychar said, with oat product exports down by similar numbers. The United States is by far the largest oats market, he said. Canadian exports were up overall but US imports of Canadian oats was down, he said. Feed use is above 2023 “which is probably why (Canadian stocks) remain closer to the record low and may certainly be below the five-year average this crop year,” he said.

Acreage to shoot higher

“There is a sharp increase in oat plantings expected,” Strychar said. “Will it be enough?  I see the oat market right now at a tipping point in North America and, quite frankly, we could expand that out to globally. We better get what we’re looking for or we’ve got trouble. Because right now as we see small grain prices, we are way above cereals, barley, wheat. One way or the other, depending on what happens in this growing season, we’re going to need an average to above-average crop and at least normal abandonment. We’re at a tipping point. It’s the contrast of near-record-low ending stocks, or in the case of Europe and Australia, tightening stocks. With no residual supply, we’re going to need average yields and good growing conditions, it’s critical or we’re going to be in a big mess that might make 2021 look like it was a minor incident. We have very little wiggle room right now. There’s no supply carryover. The average (carryover) is about 600,000 tonnes, in Canada we’re projecting about 425,000 tonnes, and the record low is about 365,000 tonnes. Last year we came in with one of the highest ending stocks that we’ve ever seen, 1.2 million tonnes and we’ve managed to chew through that much faster than I think most of us anticipated the market would consume that.”

Raw oats to play big role

Milling use is expected to see a modest recovery over time, Strychar said, with raw oats exports a major variable in North America.

“If we continue to export raw oats offshore at the pace that we are, we’re going to struggle again next year unless we have a really good oats crop,” he said. “And that tends to be residual. If we have a lot of oats, prices are lower and if acreage is what we think it is, prices are going to come down. We might end up capturing more export business, so it’s a real balancing act in there.”

Predicting the feed use of oats on farms is a similar balancing act depending on the price of oats is relative to feed grains.

“People ask me if they should buy or sell right now,” Strychar said. “This is kind of a roll of the dice. We’re already seeing higher product prices, particularly in the organic market, which is running counter to say a 30% acreage increase. So why are prices up? Some companies we talk to, they’re getting mixed messages from their suppliers, which doesn’t surprise me given the uncertainty when you get these kind of extremes, too high or too low, you start getting conflicting messages coming in the marketplace.”

North American outlook

Oatinformation projected Canadian oat production in 2024 at 3.674 million tonnes, a 30% increase from 2024.

“It’s a nice increase, but it’s still below the average by about 350,000 tonnes,” Strychar said. “That’s using a 30% average yield, average abandonment, we raised the milling use slightly, the exports we’ve held pretty steady and the feed number obviously we’re anticipating are going to drop. For every 1% the yield goes up or down or the abandonment goes up or down or the seeded area goes up or down, it’s about 40,000-tonne difference.”

That oats have become a food commodity is apparent in that more oat products are exported from the United States than are raw oats, Strychar said.

“That tells me supply chains are changing,” he said. “The dynamics of when I started in the grain industry through of all shifting more rapidly over the last 10 years.”

European and Australian outlook

Strychar touched on crop quality issues in Sweden and said European users, like North America, will stretch supplies as far as they can.

“In Europe, they will not buy 1 lb more than they need at these current high prices in anticipation or their expectation of lower prices coming down the road,” Strychar said. “We’re seeing they’re struggling everywhere and I’ve not seen these kind of prices in Europe for probably three or five years.”

Inflation issues have sent European oat prices to multi-year highs and are now receding, Strychar said.

“In Europe what we find, yields drive production,” he said. “You don’t see the kind of 30% swings that we’re seeing in North America or Canada. They’re more like 5% to 8% sometimes 2% and 3%. It’s the yields that drive production in Europe. Moisture levels are good to excessive. They’re struggling in Germany to get any seed planted because they have too much moisture.”

In 2010, Germany dominated Europe with 61% of the oat product trade in 2010, but the country is down to about 41%, Strychar said.

“It’s a changing of the guard, a shifting of what we’re seeing here in the new emerging marketplaces in Latvia, Belgium, Finland, Lithuania, Ireland and Spain,” he said.

Strychar projected a modest increase of about 4% in Australian oats acreage and Australian oat production down by about 200,000 tonnes, remaining below the five-year average.

“They’ve got the same problem that we have in North America,” Strychar said. “So much up and down and it goes back to the pricing model on the same issues over there. Somehow, we’ve got to find a way to fix this globally, it’s not just North America, it’s averaging all the major oat markets. Some of the bigger farming corn markets are just looking at oat acreage again. Right now, when we see oats at 50% of wheat value versus, we generally see oats at least 58% of spring wheat value. That’s just the rough benchmark, every farm is different, their economics are different, their agronomics are different. So that tells me that we’re probably going to get oat acres.”