UK Oat Markets 2020-2021: An overview

Background

Oats have seen big fluctuations in supply in recent seasons to the point where supply and demand has become near impossible to compute. In years of perceived surplus oats are likely to be consumed direct on farm thus eliminating over-supply. The performance of the spring variety Elyann has been encouraging for Oat Millers who have been able to supplement their preferred Mascani Contracts where necessary to deal with years when oats are short.

It’s worth noting that the suitability of Oats for Milling rather than animal feed has improved dramatically over the last twenty years or so. Today, we start from a position of assuming quality, only dealing with feed markets when lower quality samples appear.

LIFFE linked buy backs.

Linking oats to the wheat price has long been the cornerstone of winter oat marketing and this is still true today. As the balance of the UK’s wheat supply has moved between export/import parities the value of other crops price linked to wheat can also be distorted relative to their own marketplaces. This means, in some years LIFFE oat contracts substantially exceed the wider market, and less often, they can be at a discount. As demand for UK oats increases, there are more opportunities now to market oats successfully outside of the LIFFE linked markets – Bartholomews has developed a number of strong trading lines with oat millers in Europe for example - but on balance the contracts are still rightly seen as a safe haven for oat growers.

The crop in the ground

For the 2020 harvest we think nationally no more than 60% of the intended winter oat plantings got in the ground. One thing the Oat Millers dread is a surge in the spring planting of Mascani seed; this is thought to be a major factor in producing samples which do not de-hull properly on delivery. However, the weather through Jan and Feb will have prevented most of these situations and the market is going to be very reliant on the performance of the true spring crops especially Elyann. Provided the spring crop gets a reasonable run of weather and avoids a summer drought, the total acreage of oats going in this year looks to be more than sufficient to meet demand.

BREXIT

At the time of writing, we don’t know what the export status of any of our major crops will be after 31st December 2020. The potential of export tariffs being applied can’t be ruled out and one possibility is that a quota system emerges which allows our goods into Europe in roughly the same volumes they have previously enjoyed, at much reduced or even zero tariff rates. These arrangements already exist for other trading partners of the EU. Oats have a particular vulnerability here as there are currently no reduced tariffs set for the crop which means they would have to be separately agreed and could conceivably get over-looked in the rush to settle a deal. This is perhaps the biggest incentive to take out a contract for the 2021 harvest which eliminates any risk to the grower. We expect to see a significant increase in winter oats plantings in 2020 and it’s very possible that the demand for LIFFE linked contracts will outstrip supply so we encourage you to have a look at this year’s contract.

BAF Standard Terms

This marketing note coincides with the release of our BAF Standard Terms Contract for 2021 Harvest Oats, which is now available to view HERE on our website. Please call the grain office on

01243 755650

if you would like to discuss this contract or sign up to it.

Richard Wright

May 2020