Posted on March, 20, 2025 at 09:18 am
SCOTTSDALE, ARIZONA, US — Amid a global recovery in oats demand, the US oat market in 2025 is challenged by tariff complications and dangerously low levels of oat stocks in Canada, a trading partner inextricably linked to the United States.
“As the largest oat consumption market in the world, the United States is the key focus for Canadian oat suppliers, so Canada and the US, as far as the oat market is concerned, we are married,” said Randy Strychar of Oatinformation. “We are married for a long time. I don’t think it’s going to change, so that’s going to have a bearing on what the options are looking forward if the tariffs become larger or more complicated, if it truly is a trade war that breaks out. We just need each other.”
Strychar, in his oats outlook March 9 at the North American Millers’ Association (NAMA) Spring Conference, said the North American oats market, driven by health, sustainability and plant-based trends, has transformed from a feed crop to a food crop. The market comprises 30% of oat milling globally, 22% of oat production globally and the continent is No. 1 in oat and oat product exports and imports.
“Canada and the United States together is by far the single largest oat market in the world, and I mean by a country mile, it’s huge,” he said, “Right now, we’re looking about 72% of the oats that we consume commercially in Canada are for human consumption. This is no longer a feed market. There is a certain percentage of oats that they keep on farms for backgrounding for livestock, but we stabilized around 72%/28% (food/feed) and we don’t think that's going to change much.”
Strychar detailed tariffs implemented by the United States on Canadian commodities and products on March 4. Canada’s initial retaliatory tariffs remained in place after the US tariffs on commodities covered in the US-Mexico-Canada Agreement were paused for 30 days. A second wave of Canadian retaliatory tariffs were suspected after US President Donald J. Trump paused some duties via an executive order. Those were to have been enacted by Canada on US products such as fruits and vegetables, dairy, beef and pork, along with non-food goods and commodities such as electric vehicles, electronics, steel and trucks.
At the same time, China, which accounts for half of Canada’s canola market, has imposed tariffs of 100% on Canadian canola oil, canola meal and peas, and tariffs of 25% on Canadian aquatic products and pork. China also has an anti-dumping investigation on Canadian canola seed.
“These could have a huge impact of how tariffs play out with the US government,” Strychar said. “That has got to be negative for anything related to canola. It would appear to be more favorable to something like oats, but (the) oats (market) has its own set of problems.”
US import tariffs are causing significant concerns across the industry, Strychar said.
“Trying to make sense of all this chaos is not that easy, and I certainly don't have all the answers right now, so a lot a lot of that could change,” he said. “I’m pretty sure this has been intentional. In confusion, a lot happens. The corporate world, growers, consumers, we seek stability and, if possible, predictability. Markets will ultimately adapt, I hope. We’ve seen this in the past, whether it was a tariff event, a war event or inflation. Markets rebalance, and we learn how to live with what is taking place in the current marketplace. This is something like I've never seen before though, and I don't know what else is coming behind this.”
The on-and-off tariffs will create challenges for the entire supply chain including production, trade and logistics, Strychar said.
“When the tariff was on and four days later the tariff was off, economic repercussions were obvious,” he said. “Twenty-five percent tariffs are going to go to the importer of record. In most cases, that’s probably a US food company or a US miller. They're going to have increased costs that they’ll have to deal with. It's likely they're going to pass them on to the consumer and/or potentially pass them on to the Canadian farmers much as they can.”
Inherent in passing along costs comes with uncertainty. How much can be passed back to the farmer before cutting into production and sales from growers before oats become essentially unavailable? Specifics of the impact on consumer product prices varies, Strychar said, because it depends on the tariff and the contents of oats in a package, the latter typically proprietary information for food manufacturers. Consumer response, too, is uncertain.
“Where are those price inflection points where they say ‘enough’ and they don’t buy any more and they shift to something else?” Strychar said.
“Do they go away from a brand label to a private label on, for example, oatmeal? It’s still playing out. Inflation has had a huge impact on the consumer. More inflation, the tighter the pocketbook gets.”
From Canada’s perspective, there are options for shifting some oat exports to other countries, but only in small amounts, he said. But major Canadian oat millers still will prioritize the US market because of the existing logistical infrastructure.
Smaller Canadian millers have some opportunities to expand to Asia and elsewhere. The biggest potential alternative market for Canadian oats is China, the third-largest global importer averaging about 400,000 tonnes annually. That could be complicated by China’s tariffs on Canadian products and Canada’s willingness to impose 20% tariffs on China per the United States’ demand. Canada could reject that demand to keep access to the Chinese canola market, risking further US retaliation.
US food and beverage companies would be wise to explore suppliers outside Canada, and not just during the potential tariff war, Strychar said.
“No disrespect to the Canadian millers or the US millers,” Strychar said. “It just makes sense to diversify. We had a drought in 2021, we have tariffs in 2025, and when you need oat supply, it’s a lot easier to pick up the phone from a guy that you’re buying one or two containers from than to cold call and find out who’s got what and does it work. Diversify, diversify, diversify. Stay married to your big market, find alternatives.”
The path forward for the US oat market is either continued reliance on Canada for supplies, or to grow more oats domestically, Strychar said. He reminded the audience that the decline in US oat production started long before the North American Free Trade Agreement led to building more oat mills in Canada and that nation began exporting more raw oats and oat products. It is estimated that 90% of all oats used for human consumption in the United States are imported, mostly from Canada.
US growers produced 446,000 tonnes of oats in 2024 and imported more than 1.4 million tonnes of raw oats and 787,000 tonnes of oat products.
Strychar touched on the potential to expand the US oats market.
“In theory, a good idea,” he said. “You’re closer to consumption, you’re not shipping 30% of hulls, which you’re trying to get rid of or process or use for fuel. In reality, it’s a major challenge. Higher labor costs, oat-negative farm bill and supply chains. US elevators don’t handle oats, and there are a lot of supply chain problems.”
The tariff issue comes at a time when oat stocks are at dangerously low levels and production could remain below average levels.
“We’ve got a tariff problem, but we’ve got a bigger problem coming down the road,” Strychar said. “What volume under the current situation does the US need from Canada?
Canadian oats ending stocks in 2024-25 were 376,000 tonnes, near the record low, and could be again in 2025-26, Strychar said. Despite oat production increases in 2024, total supplies are below average and forecast to remain there in 2025-26. His model uses a 14% increase in acres seeded to oats.
However, “a 25% increase in oats acres is what we would need to get back to having normal ending stocks and adequate supplies where it makes prices and supplies more predictable. What concerns me is the long-term trend in lower ending stocks. We’re learning how to operate in a much tighter environment with less of a cushion than we’ve seen in the past.”
While the oat industry faces significant challenges going forward, there was a bright spot in Strychar’s outlook in the fact that a global recovery in oat demand is progressing.
“Oat trade has improved with almost every global sector, probably over 75%,” Strychar said. “We’re seeing increases from the recent lows. Inflation is well off its multi-year highs, which is good news because it killed off a lot of demand. But the possibility of inflation returning with the tariffs exists. US oat demand for oat food and beverage is mixed. We’re seeing a lot of significant increases on the high-end products. If something’s gluten-free or organic, it’s probably still taking a hit from the consumer. But there are some categories, such as oatmeal, that are doing a lot better.”
Source: World Grain