Washington Insider: Oat Shortage Looms

Oats were once an important crop on U.S. farms, used for food and feed, mainly for the national horse herd. Now, there are far fewer horses and oats do not compete well as a feed for fattening livestock so U.S. production has declined steadily for years. These markets are still important, but users now turn to Canada for more than half of U.S. needs.Still the commodity is receiving unusual press attention as Canadian output is down and prices rising. This week, Bloomberg focused on oat markets for the first time in a while.Bloomberg went so far as to advise consumers of granola and oatmeal to prepare for some sticker shock. The reason is rain and snow harvest delays across the Prairie Provinces in Canada. In addition, Bloomberg says, Canadian crop quality is poor, so there will be less food-quality grain available.The good news for producers is that since the end of September, as the extent of the damage began to emerge, prices have rebounded from seven-year lows to stage the biggest harvest-season rally in a decade. More than 90% of Canada’s oat exports end up in the United States where companies including General Mills Inc. and Quaker Oats Co. use them in everything from snack bars to cereals.“You can’t make a Cheerio out of barley,” said Randy Strychar, the president of oatinformation.com, an industry researcher based in Vancouver. “It’s going to be tight.”Production likely will drop 13% to under 3 million metric tons, Agriculture and Agri-Food Canada said. Strychar says the decline may be even greater since farmers are so far behind the normal harvest pace.