Statistics Canada (STC) today pegged the 2018 Canadian oat crop at3.436 MMT, up 4% this month but down 8% compared to last year’s estimate of 3.733 mmt and 2% above the average.
The higher estimate was not totally unexpected given reports of above average oat yields in major commercial oat areas in NE Sask and parts of Manitoba.
Many traders felt the STC estimate would come in lower than the August forecast of 3.304 MMT given the rain impacted harvest, possible area abandonment and yield reductions in many areas.
Traders tell use there are still “quality” issues with the 2018 crop but its been difficult to quantify the actual percentage of oats that will not meet milling quality as growers are still holding much of the crop.
The higher STC production estimate adds 50,000 mt to the still tight 2018/19 Canadian oat balance sheet. This will likely be offset by higher feed use of the rain impacted harvested oats.
Canadian oat end stocks still tight
We are holding our 2018/19 Canadian oat end stocks estimate at 0.527 MMT, mainly unchanged from last month. If realized, this would be down 33% from last year and 43% below the five-year average.
Feed use and exports will remain the major variable for the balance sheet moving forward. Canadian oat exports are already running 15% or 75,000 MT ahead of last year YTD (Aug-Oct). We expect this pace will increase some moving forward as US horse demand is also up, offsetting lower US oat imports from Sweden and Finland.
The bottom line is, Canadian oat supplies remain historically tight. Quality is an issue for an undefined percentage of the oat crop and global oat supplies are at some the lowest levels in years.
All this combined will keep Canadian oat prices relatively firm with a further increase in exports possible. The Aug-Dec feed number, which will be released in Feb, will be a strong indicator of how tight oat supplies will be into the 2019 oat harvest.