EU oat crop in major producers expected to fall to historic low creating issues for oat millers
Extraordinarily dry conditions across most of the Northern EU oat producing region this spring/summer is expected to produce the smallest EU oat crop on record. Production in Sweden, Finland, Germany, Poland, the UK, Denmark, Belgium and Ireland is forecast to fall to 4.848 MMT (see below). If realized this would be near the record low of 4.464 MMT reached in 2010/11. With soil moisture levels continuing to fall in many regions, the current production estimate could drop even closer to the record low.
These eight countries account for the bulk of oat production, milling and trade in the EU/UK. Oat production losses and quality issues in this group will result in substantially higher oat prices in 2018/19 for oat commercials. EU/UK traders have been reporting to us a dearth of volume offers, and what is being quoted is well above 2017/18 levels.
EU/UK oat millers are likely to struggle with sourcing enough high-quality oats, particularly so given the variable crop development across the North EU oat belt. The major EU oat countries are expected to mill 1.464 MMT of oats in 2018/19, an increase of 5% over 2017/18 estimates, and if realized a new record high (see pg. 2).
Nearly 90% of the oats milled in the major EU/UK oat markets originate in the countries struggling with the driest soil and impaired oat yields. Moisture levels have fallen to near record lows in June in Sweden and the UK and are near lows in the other major oat producers.
UK winter oat harvest is just getting underway. Early results should give an indication of just how serious the oat yield/quality issues may be.
Recent Finland Government estimates pegged 2018 oat yields to fall 16% below average. Conditions in Sweden are more serious, with yields likely to fall 12-18% below average.
Forecasts are calling for rain across much of the Northern oat region over the next 10 days. We doubt levels will be significant enough to reverse yield losses. Optimistically, good rains could stem further yield declines.