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Agenda. Current Weather Impacts US Supply and Demand Trends Canadian Supply and Demand Trends Big”4” Supply and Demand Trends Current and Historical Prices Forward Trends in Oat Milling. Developing drought in US and Canada could impact production. US oat production declined, feed

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slide2

Agenda

  • Current Weather Impacts
  • US Supply and Demand Trends
  • Canadian Supply and Demand Trends
  • Big”4” Supply and Demand Trends
  • Current and Historical Prices
  • Forward Trends in Oat Milling
slide5

US oat production declined, feed

use fell, and acreage shifted North to Canada

Govt. programs favors beans & corn

Research developed earlier varieties

Stable production since 1999

Last 5 yr avg. = 1765 mmt

(122 million bushes)

slide6

Declining imports are due to

US feed use down 26%

(777mmt’s) since 2000

U.S. Imports rose as

production declined

75% of Imports come from Canada

25% from the Scandinavian Countries

slide7

potential if dryness continues

Current New Crop Forecast

slide8

Approx. 75 % of Canadian

exports go to the US

Low production years

slide9

What drives feed use ?

  • Quality of oats
  • Price of oats compared to other feed grains
    • -- barley, wheat, and corn
slide10

Total demand for Oats in the Big “4” has declined 27% since 1990

rising food, seed, and export demand has not off-set declining feed use

Feed : down 4790 MMt’s or 45%

Food and seed: up 355 MMT’s or 20%

Trade : up 400 MMT’s or 28%

slide11

Since 1990 production

is down 38% or 4123 MMT’s ( 290 mill bushels)

slide13

Long-Term oat prices in cents/bushel

World wide crop problems in most grains

Speculative fund interest and

developing dry conditions.

Poor growing conditions

and low production

2.15

Fundamental

Trading range for 06/07

1.60

slide14

Current forward

market for 2006

1988 Drought

1980 Drought

1995 Global

Commodity Inflation

2001 production

down 20%

Avg. price since 1980 = 1.58/ bushel

slide15

Oat Market Trends

Supply Trends

  • Total supplies have trended lower since 1990 but have stabilized in past 5 years
  • Feed demand continues to decline and has been trending lower the past 5 years
  • Milling Capacity has increased by an estimated 7 mill bushels from 2000 - 2005 and is estimated to increase by another 10 mill bushels by 2007.
    • -- majority of the growth is by industrial millers
    • -- total N.AM milling capacity will be an estimated 125 million bushels by 2007
  • Limited availability of “peak capacities” have left some consumer demand unfilled
  • --new capacities will allow product companies to increase offerings.
  • Over the past five years growth in conventional oats for food has been 2-4% and organicoats about 15-20% /yea
  • -- combined growth has been approx. 4% -6% / yr
  • -- organic will continue to grow faster than conventional

Demand Trends

Milling and Food Trends

slide16

Oat Market Trends

  • Over the next five years combined organic and conventional growth is expected to be 5%/yr ( +/- 2%)
  • Key market segments for growth are convenient, portable consumer products driven by increased demand for healthy food products
  • -- bars, snacks, healthy whole grain and multi-grain blends
  • Back to back years of poor oat quality and poor growing conditions
  • Acreage expansion and decline will be determined by oat prices. These prices will be strongly influenced by bio- diesel and ethanol as corn and beans compete for these acres
  • Milling market growth 5% /year will be a key driver of oat prices. This food demand is basically [price] inelastic as opposed to [price]elastic feed demand

Milling and Food Trends cont…

Considerations going forward