Oat outlook uncertain after tight supply from 2023 crop

The tight supply of oats from the 2023 harvest meant that most of last year’s crop has been bought for milling, rather than the usual more even split between milling and feed uses.

At an estimated 830,000t, last year produced the UK’s smallest oat crop since 2016. The 2023 harvest saw an 18% year-on-year drop in production.

The area fell by 5.1% to 167,000ha, while yield dropped 13% to 5t/ha, according to Defra.

See also: Malting barley outlook – higher feed base price, lower premiums

Despite the fall in output, UK oat exports set a smart pace through autumn and winter, and by late February had reached 94,200t, representing more than 11% of the estimated crop.

This was 48% higher than the five-year average for these months, but 27% lower than in the previous season, when oats had been plentiful.

The AHDB estimated in March that oat exports this season would reach 105,000t.

The main destinations for UK oat exports are in the EU, with Belgium, Spain and the Netherlands accounting for most consignments.

© Tim Scrivener

World’s key oat producers

The global oat crop has averaged just over 23m tonnes over the past decade, with the current season coming in well below that, at 19.23m tonnes.

Scandinavia and the Baltic states are key oat producing areas in the EU, which in turn is the world’s largest oat producer, at an estimated 5.9m tonnes from the 2023 crop.

The UK is the world’s sixth largest oat producer, but represents just 4% of production, with Russia, Canada, Australia and Brazil all producing more than the UK.

Oat prices

The AHDB’s weekly Corn Returns starting in July 2023 show only sporadic reports for ex-farm feed oat prices for the 2023 crop.

Milling oats started leaving the farm at an average £194/t in late July 2023, and climbed through the season to reach an average of £274/t in the week ended 6 June 2024.

2024 market outlook

There is certainly a larger crop in the ground for harvest 2024, but much uncertainty about how much larger the area is.

While oat seed generally sold out, many traders doubt the area will come anywhere near the 29% increase shown by the AHDB Early Bird planting intentions survey, which was updated in mid-March and put the total UK oat area at 209,000ha.

The area is usually split fairly evenly between winter and spring sowings, but this year traders expect it to be closer to 30% winter and 70% spring drilled.

European agri-trade organisation Coceral recently issued a UK oat yield estimate of

5.4t/ha, but UK merchants put it closer to 5t/ha, given the late sowings and lack of sun so far.

With so much uncertainty over the area and prospects, trade estimates of the size of the 2024 oat crop vary anywhere between 700,000t and 950,000t.

As with all quality cereals, growers have committed very little forward, other than to secure a base price often linked to the feed wheat price, or used a min-max contract to give some certainty.

Millers traditionally wait until harvest to start buying in volume, so they can form a view of what the crop has to offer.

At Richardson Milling UK, agronomy manager Brin Hughes says that while yield potential for the 2024 winter oat crop is reasonable, only about 60-70% of the normally expected winter oat area was drilled.

The spring crop area is unclear and was drilled late, which is not ideal as a short season can lead to low bushel weights and high screenings, he says.

“Having said that, the weather has been relatively good for spring crop growth, the problem might be keeping them standing,” he says.

Scotgrain commercial manager Tom Mutter says spring oats are racing away, with some establishing better than spring barley, but very inconsistent weather has been a challenge for the timing of applications. 

Merchants are reluctant to put a price on new crop milling oats but expect the market to kick off lower than the high on which the 2023 crop ended.

Some advise growers not to sell oats until they know what they have got, as the 2023 crop produced some very low bushel weights.

Dominic Aldcroft of Morning Foods says: “Prices will be good again for oats, we need to keep rebuilding stock after the small crop of 2023.”

The AHDB/Defra supply-and-demand estimates show a carryover of old crop of just 55,000t, and with so much drilled late, a late harvest is likely.

Given the low stocks held by millers, this could put some heat into the market in August, suggest traders.  

The EU, UK and Canada are all going into the new season with tight stocks. Spain is a traditional importer of feed oats but is expecting a rebound in production this year, so it will not be such a big customer.

A strong pound means that UK cereals are currently generally uncompetitive on export markets.

At the AHDB, Helen Plant, senior analyst for cereals and oilseeds, says areas drilled in EU oat producing countries are also up – prompted in all likelihood by this season’s high prices – but that a late spring everywhere makes output uncertain.

The picture for the UK crop will be clearer once the AHDB Plantings and Variety survey results are out in a few weeks’ time, she adds.

The UK has a new entrant oat miller, Navara, which should boost demand, although it is unclear how much the new entrant will buy this coming season.

© Tim Scrivener