A room packed with oat growers waited patiently for Randy Strychar’s outlook on oats at Crop Production Week in Saskatoon. They weren’t disappointed.
Oat acres have been declining and abandonment increasing in the face of relatively good demand. “We’re chewing through a smaller oat crop, yes, but at a much faster rate” than the average, Strychar says.
Strychar, of Vancouver-based OatInsight, believes the oat market could transition from bear to a true bull by late in this crop year if certain conditions occur.
Steady or slightly higher seeded acres than last year combined with average abandonment and average yields would still result in tight ending stocks, Strychar says.
What’s more, based on the Saskatchewan Ministry of Agriculture’s 2010 projected returns per acre, Strychar wouldn’t be surprised if oat acres drop, further tightening ending stocks. Things could start looking very friendly for oat growers by summer, he says.
Looking long term, Strychar says Canada needs to focus its efforts on the U. S. pony market. “Past high prices resulted in Canadian farmers losing market share, share that’s not been regained,” he said.
Further losses stem from major formulation changes in recent years. Issues with starch content and digestibility mean feed makers have moved away from oats and toward other ingredients, such as beet pulp.
The U. S. feed market is largely being supplied by Sweden’s and Finland’s crops, but if feed makers can be convinced to add oats back in to rations, Canada would benefit. But oat growers “need a pretty hefty marketing campaign to gain back that market,” he says.
To drive home this message, Strychar points out oats prices as a percentage of corn are down around the 60-65 per cent range, as opposed to the 140 per cent range seen during the drought years.
Lyndsey Smith is an associate editor with Grainews in southern Saskatchewan.