China is the third-largest global raw oat importer behind the US and Germany. Exports to China have been dominated by Australia over the past five years when China began to substantially increase imports.
Russia however has made inroads to the Chinese market over the past 19 months as Australia struggled with reduced production due to drought conditions.
Total Russian exports to China have risen to nearly 88,000 MT over the latest 19 months This compares with almost nothing in the prior 24 months. The chart below shows a good correlation between lower Aussie exports and higher Russian exports.
Canada continues to be shut out of the Chinese market as no oat import protocol has been established between the two countries. We don’t expect this to change anytime soon, certainly not if Canada continues to hold Meng Wanzhou, Huawei’s CFO who was arrested on behalf of the US. It should be noted however Canada is exporting small quantities to China. But this are classified as seed oats.
China is forecast to increase oat imports in 2020/21 to 350 ThMt, up from 222 ThMt last year. With production expected recover in Australia this year, including Western Australia where the bulk of exports to China originated, we expect lower Russian exports to China moving forward.
China continues to struggle with sourcing enough quality domestic oats to mill. Despite efforts to improve breeding, traders tell us China oats are just not performing well for oat mills.