December oats traded up to their 25-cent limit on the CBOT Wednesday, reminding farmers, traders, and procurement managers of just how dry conditions are in the Northern Plains this year.
Gro’s Drought Index (GDI), weighted to North Dakota cropland via the Gro Navigator for Agriculture app, currently shows a statewide reading of 3.77, indicating “extreme drought.” That surpasses the previous worst recorded drought back in 2006, when the index reached 2.45, or “moderate drought” at this time of year.
The cropland weighted GDI for North Dakota has been indicating 15-year highs since mid-January.
The US oat crop was harvested in early September. Typically futures prices hit lows following harvest as additional product is available, pressuring supply. Markets are concerned that production will be revised even lower when the actual harvested acres are calculated. This year’s drought could have lasting effects on oats prices for several months.
In 2021, US farmers planted 2.4 million acres of oats, 20% below the previous year as competing crops took greater share. The heightened drought in the Northern Plains also impacted yields, dealing a double blow to production.
North Dakota historically has produced about 10% of the total US oat crop, with Minnesota and South Dakota also major producers. But this year Iowa took the reins as the top producing state because of declining output in the Northern Plains.
Other North Dakota crops, including soybeans, wheat, corn, canola, barley, sunflowers, and sugarbeets, have also suffered production losses due to heightened drought conditions.
Drought pressures also hit crops in Canada, where production of oats fell 44% versus last year, spring wheat was down 41% and canola declined34%, which represented the lowest canola production in a decade.
This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.