Global Oat Market Is Losing Its Steam

Cereals September 12, 2018
Author: Sergey Avramenko
Head of Global Markets Research Team

Global Oat Market

IndexBox has just published a new report "World: Oats - Market Report. Analysis And Forecast To 2025". Here is a summary of the report’s key findings.

Oats are widely used both in animal feeding and human consumption, with oat flour and flakes being consumed as an ingredient for oat cookies and other bakery, as well as in cereal breakfasts. In 2017, the volume of the global oats consumption stood at approx. 23M tons, not moving far from the 2016 figure.

After the volume of oat consumption peaked of 26M tons in 2007, from 2008 to 2017 it stood at a somewhat lower level and has failed to reach the 2007 figure in the 10 year period analyzed. The most prominent rate of growth was recorded in 2011, an increase of 16% against the previous year level, indicating a worldwide post-crisis production growth and stabilization. Overall, 2007-2017 the market has been experiencing -1.0% CARG as a result of losing its attractiveness as animal feed compared to mixed feed, inability to compete with more profitable wheat and grist, and market over-supply in 2011 and 2013 which dropped prices, further discouraging oat farmers.

Global Oat Market

Russia (4.7M tons) dominated the consumption of oats in 2017, accounting for 20% of the world market. Russia's leadership is due to traditionally popular habit of using oats for food consumption and animal feed, and a relatively large population. Other large consumer countries are the U.S. (2.4M tons) and Canada (1.3M tons), together comprising 36% of total consumption.

Global Oat Market

According to IndexBox forecasts, oat is losing its popularity globally as an animal feed, and some farmers also find it less profitable than growing wheat or grist, affecting the global scale of production and consumption. However, the Chinese market has a low degree of saturation which gives hopes to producers worldwide on increasing prices and consumption volumes as China is to start bringing their tariffs down in early 2019. Therefore, as some of the Chinese trade schemes have already been settled (with Australia, for example), and the Chinese market is expected to improve further, it is projected that the performance of the global market is forecast to attain a moderate growth. Thus, the volume of consumption is set to increase with an anticipated CAGR of +1.9% from 2018 to 2025 to a figure of 27M tons in 2025.

Global Oat Market

How to Choose the Best Export Market for Suppliers of Oats

IndexBox analysts expect that one of the crucial initiatives to be considered by local producers in the long run would be the search for new overseas markets. Our analysts developed a step-by-step algorithm for solving this problem, based on the use of big data, which are processed by the IndexBox AI Platform. The decision-making logic is shown in the figure below.

Global Oat Market

In the process of determining the best export prospects, it is necessary to answer four key questions: 

1. Which markets performed best in terms of oat sales in the last 5 years? And which markets were among the outsiders?

2. Which countries are the most promising, in terms of oats consumption growth, and which ones are already saturated?

3. In which countries are local producers unable to satisfy the increasing demand for oats? Or, in some cases, which countries do not produce oats, at all?

4. Which markets are the most profitable for oats producers?

Previously, in order to answer these questions, analysts would need at least 6 weeks and over 400 sources of information. Today, using only one tool - the IB AI-platform, you can answer this question in less than 5 minutes. 

So, here is the first chart and the first question: Which markets performed best in terms of oat sales growth in the last 10 years and reached high figures in 2017? And which markets were among the outsiders? Here we will compare the volumes of consumption and growth rates for all the countries under review.

Global Oat Market

We can see that our target is represented by large and growing markets, such as Brazil (1M tons), The UK (858K tons), Argentina (827K tons), China (822K tons) and Chile (526K tons) also constituted the largest markets in 2017, but their growth rate was somewhat lower than that of Brazil. On the other hand, Russia (4.7M tonnes), the U.S. (2.4M tonnes), Canada (1.3M tons), Poland (1.3M tons) and Germany (993K tons) constitute the world largest markets, but they are not currently expanding.

Next question: Which countries are the most promising, in terms of oat consumption growth, and which ones are already sufficiently saturated?

Here we estimate the average per capita consumption in 2017 and its dynamics since 2007. 

Global Oat Market

The chart enables identifying markets with a large and growing average per capita consumption. This group includes Latvia (84 kg per person), Norway (73 kg per person), also Poland (33 kg per person), Chile (29 kg per person) and Romania (20 kg per person). A large and growing per capita consumption signifies consistently high popularity of oats in these markets. However, it might be a sign that these markets are close to saturation. Besides, in Finland (128 kg per person), Sweden (53 kg per person), Denmark (49 kg per person), the per capita consumption is the world’s largest, but its growth in the past 10 years has been comparatively low, which also indicate high market saturation. 

In the third step, the question is the following: In which countries are local producers unable to satisfy the increasing demand for oats if they produce it at all?

Further, our task is to identify countries with a high share of imports, which will testify of the existing infrastructure for importers and market prospects for organizing new supplies. 

Global Oat Market

The diagram shows that Germany with 511K tons and China with 394K tons of oats imported in 2017 are by far the largest importing markets that have been growing rapidly for the past 10 years. Mexico (132K tonnes), Sweden (36K tonnes) and Latvia (31K tonnes) are also among large and growing importers. The U.S. (1.5M tonnes) is the largest importer overall, but alongside with Spain (84K tonnes), the UK and some others, its imports growth remains quite slow or even negative, compared to the leading countries.

Finally, basing on the counties left after our selection process, we will find markets with high and growing import prices to identify the most profitable ones to exports to.

Global Oat Market

These countries include France ($411 per tonne), the UK ($327 per tonne), Denmark ($307 per tonne), and Italy ($278 per tonne). Nonetheless, despite somewhat lower prices, China is one of the most promising markets due to its growing oat consumption, and high demand for imports. 

Summary

Comparing the results of the 4 diagrams, we can state that China, France, the UK, Denmark and Italy now appear to be the most promising markets for foreign suppliers of oats in the world. In these countries, there is either a significant or rapidly growing volume of imports. Moreover, import prices in most of the above-mentioned countries remain relatively high. On the other hand, the US is also an interesting option as the oat imports there are sufficiently large and import prices are growing slightly.

Using the IB AI-platform you can perform such an analysis and many other operations yourself. Our specialists will be happy to answer questions. It's our job to help you make informed decisions. 

Do you want to know more about the global oat market? Get the latest trends and insight from our report. It includes a wide range of statistics on

  • oat market share
  • oat prices
  • oat industry
  • oat  sales
  • oat import
  • oat export
  • oat market forecast
  • oat price forecast
  • key oat producers

Source: World: Oats - Market Report. Analysis And Forecast To 2025