The 2018/19 Canadian oat balance sheet remains very tight after the first five months of the crop year. End stocks are forecast at 0.527 MMT, which if realized would be down 33% from 2017/18 and 38% below the five-year average (see below).
Two variables, exports, and feed use remain the major factors that will impact the final end stocks estimate. Milling use, the other major commercial use of oats is forecast to climb to another record high in 201819.
Exports to the end of October were running 15% ahead of 2017/18. Stats Can is out this week with the November export estimates and is likely to confirm strong numbers. Offshore and implied exports to US horse markets have shown surprising strength YTD.
Total 2018/19 exports are forecast at 1.780 MMT, up 2.8% YOY. Exports will be higher to Mexico and South Korea this year due to substantial oat production shortfalls in Australia this Year. Additional exports will go to Ecuador, Peru, United Arab Emirates, and South Africa, again particularly tied to Australia production issues.
Domestic feed use remains the other major variable for the oat balance sheet. CY feed use is pegged at 1.0 MMT. If realized, this would be down 3.1% from 2017/18.
However, the larger than expected percentage of lower quality oats from the rain/snow impact harvest could see the final estimate come in higher than the 1.0 MMT currently forecast. Again, if realized, this would further tighten the balance sheet.
Stats Can will release the Aug-Dec 2018 feed numbers in early December.
The bottom is Canadian oat end stocks will be tight to finish the crop year. North American oat millers have however done a fairly good job of early forward coverage. This coverage, however, will likely run out in early spring, requiring further buying into the face of a tight balance sheet.