ABARES released their September oat production forecast last week. Total oat production is forecast at 1.632 MMT, up from ABARES June estimate of 1.551 MMT. If realized, this will be the largest oat crop in 10-years and well above the five-year average of 1.224 MMT (see S&D above).
Production in Western Australia, the largest exporting state, is on track for a record large oat crop, while crop prospects improved in many eastern regions.
ABARES indicated seasonal conditions in most cropping regions during winter were very favourable, and crops are generally in very good condition at the beginning of spring. In the eastern states, including South Australia, winter rainfall was average to above average. In Western Australia, winter rainfall was more variable but timely and the season opening was generally very favourable.
In some regions, particularly in parts of New South Wales and far southern Western Australia (WA), crops were waterlogged by very high winter rainfall. This is expected to constrain yields in these regions.
In its latest three-month rainfall outlook (September to November 2016), issued on 25 August 2016, the Australian Bureau of Meteorology forecast spring rainfall to be around average in most cropping regions in Australia. This should help developing oat crops into harvest, particularly in WA where subsoil moisture levels remain low.
The higher Australian oat production outlook is going to outstrip forecasted 2016/17 export and domestic milling demand and will likely result in higher feed use and or end stocks.
Demand for Australian raw oats and oat products have been steadily increasing to China, Asia and the Indian Subcontinent in recent years. These current demand forecasts will not however be enough to offset the production increases that are expected this year (see chart bottom pg. 2) .
If the harvested oat quality is near normal, there is going to be pressure to recapture some lost export markets for raw oats to reduce supplies and maintain current price levels. Canada has benefited from the Australia reduction in oat exports to traditional customers such as Mexico, South Africa and UAE in recent years.
Oat prices quoted to growers in Western Australia have fallen sharply from 2015/16 highs and will find difficulty in gaining much traction if 2016/17 oat supplies/end stocks are as forecast.