Oats play such a big role in my household – and in that of most North Americans – that it’s easy to forget that it is a tiny crop on this continent, and utterly irrelevant to American farmers.
It’s in my face daily, and not mainly by market reports. In the morning when I stumble off to the kitchen to make breakfast for my wife and me, it’s often the big box of Quaker oatmeal that I grab. My consumer’s mind tells me this breakfast is cheap, is whole grain, makes us feel good and warm, and is likely to be eaten as well by my 17-month-old girl, who demands adult food but only of a sort that meets her exacting gourmet standards. If I don’t make us all oatmeal for breakfast, I’ll make some other adulty food, but also set out my daughter’s plastic bowl and fill it with milk and that great oat product of Cheerios. Noella, my daughter, will eat cheerios soaked in milk, dry in a bowl, from a pile on the edge of a table, or from the corners of the chesterfield where she has stuffed them for later, unknown to my wife and I. It is the ultimate toddler food.
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Worrisome drop in grain prices
Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
Recently our oats consumption has shot up even more, as Noella developed a hivy allergic reaction to either a scented skin lotion or to oranges we had been feeding her. The doctor’s prescription: Reactine, and a daily oatmeal-based moisturizing bath. Oats again. So every day now I’m dumping a packet of finely ground Aveeno Daily Moisturizing Bath “with natural colloidal oatmeal” into the tub and bathing my itchy toddler. And it’s working. That shouldn’t be a surprise to me because a few years ago my pet miniature Schnauzer, Asta, developed a dry skin condition and the vet ordered – you guessed it – an oatmeal shampoo.
I also indirectly run into oats once a year when we troop off to Assiniboia Downs, the horse racing track here in Winnipeg. The thundering hooves come courtesy of the highest-grade, most expensive oats known to humankind, of a quality far above that reserved for humble humans. Oats are rocket fuel for the equine.
But even though it’s a monster crop in the public’s eye – does anyone not know what Cheerios and oatmeal taste like? – it’s production base is absurdly small. In Canada it’s mainly confined to eastern Manitoba, where its fusarium-rejecting abilities are golden, and to southeastern Saskatchewan, from Saskatoon to Yorkton, where they grow it superbly. There are other pockets of production, but that’s it on this side of the border. South of the border it’s hardly grown at all, and hardlyer all the time. American farmers have abandoned it the way Republican congressmen abandoned George W. before last fall’s elections. It just doesn’t stack up against the booming yields of corn and soybeans and if you can grow spring wheat outside of the fusarium belt, why would you grow oats? Acreage in the U.S. has been on an extreme decline for many years and is just a niche, special crop there now.
That has U.S. processors like General Mills and Quaker very worried and trying to talk farmers in Canada into keeping growing the stuff. So with that industry support, and the booming multi-sector market demands that are showing up in my kitchen, in my bathroom, and at the racetrack, you’d assume this micro-acreage base would be offering Canadian oat growers the big, big money.
But alas, as all you who grow the crop know, oats prices are in the toilet right now. It’s the worst crop to have in the bin this winter. (Soon it may be the worst crop to have in the bin this spring.) All crops plunged in the commodity market collapse after July, but oats did about the worst. All the other big crops had a nice recovery after early December, but not oats, which continued to slump and got a lot slumpier. The other crops later sold off a lot of their gains, but at least farmers had a chance to sell at temporarily higher prices.
Prairie farmers are at fault for this. They grow oats spectacularly well, and this year, with good conditions, they produced a monster crop. If they were less good at what they do, the oversupply problem would not be nearly as bad. But prairie farmers can produce great crops in good conditions, and that’s what they got last summer. Not only are farm bins full, but the giant commercial storage elevators in Duluth and Minneapolis have been full since harvest. That doesn’t give the market any excuses to rally, and they haven’t.
Now, this week, oats prices are rising nicely out of a recent triangle formation, perhaps in response to that or perhaps simply because they’re being dragged higher by the rally of corn, soybeans, canola, wheat and the overall world rally of stock markets. Everyone’s feeling peppier again. Today Chicago futures prices are back above $2.07 per bushel, which is a bunch better than late February’s $1.85.
Oats has been the sick man of the grains, something which makes sense in the stats but which always confounds me when I look around my house at all the oats products. Surely all this cereal and shampoo and hungry horses combined with a small acreage base should produce a strong, steady demand. But then I put my figuring cap on and begin weighing out what all this demand means. How many Cheerios is my daughter really eating? From broken Cheerios all over the house and the pervasive Cheerio dust all over my house, you’d assume a lot. But it takes us weeks to go through a box of the stuff. And this oatmeal shampoo, that cost me $12 for a package of eight? How much oats is in that? Well, according to the box, which weighs as much as the contents, each package contains 21 grams of stuff, of which 43 percent is oatmeal. If I furrow my brow and think until it hurts, I can figure out that it would take about 10,000 itchy and Cheerio-hungry toddlers to consume the oats produced on a section of land near Yorkton.
It may be a high profile crop, with many interesting markets, but it isn’t free of the laws of supply and demand. Oat growers can feel proud of all the high value, high quality markets they serve, but they can’t be feeling very good about what it’s getting them right now.
