Oat milk, the new alt-milk, could see a glut due to over-planting

Winnipeg/Chicago — The oat bubble is probably set to pop.

The newfound popularity of oat milk that’s sold everywhere from Starbucks cafés to Amazon has turned the cereal plant into a hot commodity, and profits are soaring for growers. Now, farmers are undertaking a planting bonanza that will boost acres to the most in more than a decade.

While consumption is robust, that expansion in planting will probably outstrip annual growth in export and milling demand. The pending glut could cause prices to collapse, said Randy Strychar, president at Vancouver-based Oatinformation.com.

“You’re going to drive prices down,” Strychar said. “Once the seed gets in the ground, I’d say April, May, you’ll begin to see some declines.”

For vegans, it means cheaper oat milk and oatmeal could be on the horizon. Oat futures for May delivery in Chicago have risen 16% from a low last year. Growers in Canada, the top exporter, will boost acres by 9% to the most since 2009, according to a February report from the nation’s agriculture ministry.

“The net profit is a lot easier to pencil on oats than it is for anything else,” said Henning Wubbe, a farmer in La Rivière, Manitoba, who is doubling oat acres on his farm to 263ha. A US buyer has already agreed to purchase 80% of that future harvest.

A fervour for oat milk at independent coffee shops in the US has led to supply shortages in recent years, and beverage companies have raced to launch their own brands, with even traditional milk companies joining the fray.

Oat-based ice creams and yoghurts have followed. The alt-milk won over consumers with its creamy texture that imitates real milk better than its nut- and soy-based competitors. Baristas have praised it as a tool for great latte art. Besides dairy alternatives, demand is also coming from farmers adding it to animal feed.

Bloomberg