There are a bunch of reasons, but the main one is, not surprisingly, money. There simply aren’t enough oat farmers in the world, or enough oats grown, to create sufficient demand to justify the incredibly expensive research that goes into developing genetically modified seeds.
Weather affects all agricultural crops, and oats are no exception. If crop yields suffer as a result of a prolonged freeze or an extended drought, then oat prices could spike higher. On the other hand, ideal weather conditions could produce a bumper crop and depress prices.
There simply aren’t enough oat farmers in the world, or enough oats grown, to create sufficient demand to justify the incredibly expensive research that goes into developing genetically modified seeds.
Fewer people look for steel cut oats, so it’s more of a specialty item. Rolled (non-instant) oats are often way cheap, and generally work the same as steel cut in most applications. Totally postulating out of thin air here, but maybe it’s market forces—steel cut oats are perceived as healthier and therefore people will pay more for them.
Why are oat prices so high?
Oat increased to an all-time high of 675 USd/Bu, amid lower crop production in North America due to drought and increasing global demand. Production in Canada, the world’s biggest exporter, fell by 43.6% from a year earlier to an 11-year low of 2.6 million tonnes.
One question we ran across in our research was “What happens when the price of oats increases?”.
Some think that if the price of oats rises significantly higher than corn, then farmers might shift toward corn for their feed. Of course, if oat prices are significantly lower than corn, then oat consumption could increase. Over the last several decades, the price of oats has been highly correlated with corn prices.
Some think that oat is expected to trade at 400.89 USd/BU by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 441.81 in 12 months time.
How to invest in oats?
A popular way to invest in oats is through the use of a contract for difference (CFD) derivative instrument. CFDs allow traders to speculate on the price of oats. The value of a CFD is the difference between the price of oats at the time of purchase and its current price.