Dive Brief:
- Oat prices have fallen roughly 40% since March and are now at their lowest point in two years.
- The reasons are varied, but the primary driver is that supply soared and prices dropped as railroads caught up to the backlog caused by last year's harsh weather.
- The price drop is good news for much of the food industry, particularly oatmeal processors like Quaker Oats, cereal makers such as General Mills, and ranchers who use oats to feed livestock.
Dive Insight:
The global oats trade, which was once a sleepy business confined to a handful of commodity brokers and food companies, has gotten pretty intense in recent years. Hedge funds have became major players. European imports have become a factor, and the industry is investing heavily in oat processing. That's all been good news this year for oats buyers, but the good times may not last. There's a reason why they call those commodity contracts "futures" - it's because you can't predict them.