Oat Prices Explained
Oat prices started a bullish market in 2024 as they registered a 2.43% value decrease. The lack of export demand and the piling inventory caused the commodity’s cooling prices.
Additionally, cheap grains from the U.S. put further pressure on oat prices. However, agriculture experts are hopeful that low supplies due to drought-related yield reduction will fuel the oats market.
Why are oat prices fluctuating?
Generally, the price of oats moves along with other grain prices such as wheat, corn, and barley. Economic and trade factors also come into play but these are the top contributors to oat price fluctuation:
1. Weather Conditions
Several comparative studies conducted in Minnesota and Finland revealed that oat yields are severely impacted by spring and summer warming. Thus, its availability and market price depends on its total output.
For instance, summer droughts in the U.S. decreased oat production by 40% according to Chad Hart, a professor of economics and crop markets specialist at Iowa State University.
Additionally, the intense heat and freezing frost also knocked Brazil’s grain business by 8% according to its government’s federal data. Overall, these significant changes in weather temperature take hold on oats supply and prices.
The rise of various fad diets also shapes oat demand and price variation.
Oat has lots of health benefits that are necessary for a healthy diet. Additionally, doctors recommend oats as part of the meal diet which strengthens their demand in the market.
As a result, the increasing need for oat consumption certainly affects its price markup.
3. International Trade Policy
The U.S., the European Union, Canada, and international organizations imposed product sanctions against Russia after it invaded Ukraine which started in February 2022.
Russia ( the largest oat producer in the world with 4,424,433 tons of oat production per year ) is left to find another alternative market. Thus, the country leverages its Asian connections coupled with export discounts to China, Mongolia, Turkey, Pakistan, and South Korea.
As a result, the ban subsequently drives the oat price in the market, particularly in Europe
Which variables impact the price of oat?
- Weather Conditions
- International Trade Policy
- Production Costs
- Competition from other Crops
- Government Policies
Where does oat come from?
The Paleolithic hunter-gatherers first incorporated oats into their diet 32,000 years ago through hand grounding and cooking it in boiling water.
Its popularity grew when the Romans introduced it to Scottish farmers in the British Aisles. Oat further expanded in North and South America in the 17th century through English immigrants and trade.
Presently, oat ranks as the 7th most important cereal after corn, rice, wheat, barley, sorghum, and millet. There are 3 species of oats circulating in the food and animal industry:
1. Avena sativa
The ones we buy from the grocery and thus, part of our breakfast and snack diet.
2. Avena byzantina and Avena strigosa
These species are for animal feed such as horses, cattle, goats, sheep, poultry, pigs, and dogs.
3. Avena abyssinica
This type of oat is exclusive only to Ethiopia and is part of the African diet.
Overall, Russia tops the oat-producing countries globally, with an average of 3.8-3.9 million metric tons of yearly oat production. Canada, Poland, Finland, and Australia follow distantly.
What is the future price of oat?
While oat prices show diminishing factors in the market, the commodity’s availability and prices will soon increase as the Western cropland consistently experiences a warmer and drier winter which lessens its productivity.
Additionally, equipment costs per acre go on a price hike as the supply chain log and inflationary measures influence manufacturing, materials, and labor value.
Overall, the oat demand and prices come after its increasing consumer popularity due to its healthy benefits. Additionally, oat farmers haven’t fully recovered from the consecutive droughts that damaged their crops.
Thus, oat prices will remain elevated at $467.80 per bushel in 2028.