ASIAN demand is likely to underpin the milling oat market well into the future, according to a Wimmera milling company.
Managing director of Mid-West Milling at Nhill, Alastair Beaumont, said the days of growing oats only to see the price plummet to below $100 a tonne at harvest time were long gone.
"Today, the demand is nearly insatiable heading north into Asia, as these countries become Westernised and their diets demand grain-based foods," Mr Beaumont said.
He said the minimum domestic demand by mills for milling oats in the eastern states was 350,000 tonnes, while in Western Australia it was about 250,000.
The insatiable demand from Asia and other markets meant most mills struggled to get enough oats to meet their milling requirements. That forced Victorian mills to go interstate to source milling oats, sometimes as far as Western Australia, Mr Beaumont said.
"This is disappointing when Victoria, South Australia and NSW are such large grain-producing states," he said.
Mid-West Milling is offering cash contracts at $220/tonne for milling oats and a guaranteed minimum price contract at $210/tonne, delivered to its mill at Nhill.
Mr Beaumont said the GMP contract meant growers could capture price increases when they occurred.
He said the cash contract was likely to slip back to $210/tonne within a couple of weeks, but the current price was equivalent to $250/tonne at port.
"This is $60 above feed barley, $25 above malt barley and $25 above Australian Premium White wheat," he said.
Mr Beaumont said overseas demand for milling oats had reached a point where if prices became too low the demand for export rapidly increased as the Australian product competed with oats coming out of the EU and Canada.
"So you would like to think that the days of massive oversupply and pricing with no support are over," he said.
"There may be a lot of growers growing oats for either hay, feed or feed grain, but very few seem to be actively growing true milling oat varieties for milling where the true demand is for premium pricing."