The Van Trump Report

Oats All Time Highs! Cotton Trading at Highest Price in Almost a Decade

As you can see in the charts below, Oats are at all time highs! The increased demand for oats the paast few years coupled with the current production hiccup in the U.S. and Canada might leave millers short the amount of supply needed to meet demand. Last week, the USDA showed total oat production estimated at a record low 39.8 million bushels, down -39% from 2020. Yield was estimated at 61.3 bushels per acre, down -3.8 bushels from the previous year. Harvested area, was forecast at a record low 650,000 acres, down -36% below last year. The Canadian situation isn’t much better…The Canadian Prairie drought has hurt produciton with Canada’s average yield estimated at 60 bushels per acre, down -34% from the previous year and down -38% vs. the 20-year trend. Total estimated Canadian oat production is 2.5787 MMT’s or down -43% from 2020. This is the third-lowest oat produciton number harvested in Canada going back to 1908.

Cotton prices have also exploded higher and are now trading at multi-year highs. Cotton prices are actually up +22% in just the past two-weeks. But when you look at the 50 year chart we are still a long way from the all time highs posted back in late-2010 and early-2021. There are many factors at play today in creating the rally but a few of the larger line-items include: extreme global weather, crops in China and India getting smaller; China increasing import purchases; Talk of increasing U.S. export demand; Strong competition form other crops keeping cotton acres somewhat limited. Remember, in December 2020, former President Trump’s administration blocked U.S. companies from importing cotton and cotton products originating in China’s western Xinjiang region due to concerns about forced labor.

Insiders are saying those penalties, which remain in place during the Biden administration, have caused more Chinese companies to buy US-grown cotton, make goods with it and then selling the products back to the U.S. and other markets.

Leave a Comment

Your email address will not be published. Required fields are marked *