Good news for fans of porridge and other oats-based winter warmers. An unusually big oats harvest in the UK is sending the price of oats tumbling.
The bad weather last autumn made normal planting difficult and limited seed availability on many crops, resulting in many growers switching to oats, where availability was better. As a result, the area planted with oats in England - where nearly 80% of the UK’s oats are grown - stands at a whopping 138,000ha this year [Defra] - up 50% on 2012 and the biggest since the late 1970s.
Grain co-op Openfield says the UK could be on course to produce about one million tonnes of oats. This would put enormous downward pressure on commodity prices unless the UK finds new markets, it adds.
However, this could prove difficult. Europe’s major oats exporters - Finland and Sweden - are also reporting good oat crops, with traditional buyers of UK oats such as Spain also needing less because of good domestic harvests.
Growers could try to encourage Brits to eat even more oats, but there is a limit to how much further domestic consumption can be pushed. Human and industrial consumption of oats in the UK has increased steadily in recent years, driven by new porridge convenience products, cereal bars and oat-based biscuits, moving from 420,000 tonnes in 2006 to about 500,000 tonnes last year [AHDB/HGCA].
With no clear outlet for the UK oats surplus, prices have taken a beating. Ex-farm prices for oats stood at about £190/t during the week of 29 September 2012, but were down to just £120/t last week [AHDB/HGCA]. Further price drops could be on the cards, but while some growers would have planted oats on a speculative basis, others will be on buy-back contracts with premiums or set prices, making them less vulnerable to market fluctuations, Openfield says.
Prices digest
- Pork: The shareholders of US pork giant Smithfield have approved the company’s $4.7bn takeover by China’s Shuanghui International.
- Dairy: US private equity house KKR has announced it is teaming up with a Chinese private equity firm and dairy company China Modern Dairy Holdings to invest $140m in two 10,000-cow farms in Shandong over the next two years.
- Crops: The Norwegian government has created a $23.7m research fund to “conserve and sustainably manage the world’s most important food crops”. The news was announced at the Governing Body of the International Treaty on Plant Genetic Resources for Food and Agriculture.
- Cotton: Global cotton prices are set to remain strong, even though the market is in production surplus, Macquarie has said in a new report. Much of the surplus was “stuck” in China, where the government continued to stockpile cotton at above world price levels, the bank added.
Wholesale prices: biofuel sector’s love of coconuts costs food industry dear
The price of desiccated coconut has increased by 15% over the past 12 months as a result of growing demand for coconut oil from the biofuels sector, which has led to more producers selling their coconuts to oil producers rather than into the dried fruit sector.
Meanwhile, production problems in Turkey continue to weigh heavily on hazelnuts and dried apricots. The Turkish apricot crop for 2013/14 is expected to be much smaller than in 2012/13 as a result of bad weather, which has also affected crop quality. At £2,254/t, prices in the UK are therefore up by 24.2% year on year, although they are down slightly on a month-on-month basis because of dampened demand.
Bad weather is also to blame for high hazelnut prices, which are currently up by 32.5% year on year. Production for 2013/14 is set to come in at 0.64 million tonnes, down 15% on the 0.75 million tonnes produced in 2011/12.
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