July oats futures (ZON25) last Friday scored a nearly three-month high of $3.80 a bushel and prices have been trending higher since early April. When I was a cub markets reporter on the trading floor of the Chicago Board of Trade 40 years ago, long-time grain traders would tell me to closely watch for bigger, trending price moves in the smaller oats futures market. “Oats knows,” those grain traders told me.

For perspective, at current prices around $3.80 a bushel, July oats futures are still trading above the sideways range occupied by the nearby contract over the bulk of the past 50 years. However, oats prices are in the bottom portion of their trading range seen over the past five years. That five-year range is bound by a low of $2.91 ½, seen in May 2023, and a high of $8.11, basis nearby futures, scored in April 2022. Given that price range over the past five years, oats market bulls reckon there is plenty more room for prices to run on the upside.

Oats futures prices have been rallying amid reduced global production of the grain, better world demand, and questionable supply chains. The ongoing Russia-Ukraine war has also limited the supply of oats worldwide. A lack of precipitation in U.S., Canada, European Union and Russian oats regions in the past few years has reduced global oats stockpiles too.

In its latest annual small grains summary report issued in September 2024, the U.S. Department of Agriculture said oats production in 2024 was estimated at 67.8 million bushels, up 23% from 2023 in comparable states. Yield was estimated at a record-high 76.5 bushels per acre, up 7.7 bushels from the previous year in comparable states. Harvested area, at 886,000 acres, was 11% above 2023 in comparable states. Keep in mind, however, the 2023 global oats crop was well down from previous years, as seen in the USDA graph below.

A Critical Timeframe for Grain Futures Markets Lies Just Ahead

Interestingly, the recent rally in oats futures comes just ahead of what are arguably the most important several weeks of the year for the grain futures markets. 

The month of July tends to see rainfall events in the Corn Belt become less frequent, along with rising temperatures that can create a heat dome over the U.S. Midwest that produces weather-market rallies in corn and soybeans. Early July marks the beginning of the important pollination period of growth for much of the U.S. corn (ZCN25) crop.  Any hotter, drier, and windier conditions during corn pollination can significantly reduce yield potential. July also sees the U.S. winter wheat harvest (ZWN25) ramp up. 

Specifically, trading in grain futures markets can be pivotal in the few trading days right after the Fourth of July. History shows that existing price trends in the grain markets can be accelerated or reversed during this critical and more volatile period for grains after July 4.

Given that weather forecasters can predict with varying degrees of accuracy Corn Belt conditions two weeks ahead, or more, the grain futures markets may become more volatile as early as mid-June. Speculative grain futures traders are buckling up for what is historically a more exciting time of year just around the corner. And the oats market is flashing an early, bullish signal.

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