What are Oats?
The common oat plant is a species of cereal grain grown for its seeds. Oats are a major worldwide grain on international markets and key focus is production for human consumption as oatmeal and rolled oats, also a common use is livestock feed.
Oats tend to be harvested in the autumn months but are available throughout the year. They are a durable cereal grain that is able to withstand poor soil conditions in where other crops are not sustainable. This allows for oats to be harvested all over the world in various conditions.
Like other grasses used for food, oats grow on stalks with the kernels spread throughout a loose tree-like framework. Upon harvesting oats are processed by having their hard hulls removed before they can be sold,either whole, as oat groats or milled as rolled oats.
Uses of Oats
Oats are a key ingredient in food and beverage and as a food source for livestock. Within food oats are rolled or crushed into oatmeal or ground into flour. Oats are a common ingredient in many cold cereals, in particular muesli and granola. Oats are also know to be used in the beer brewing process, in particular Britain for some stouts. Oats are also widely used as a thickener in soups along with rice or barley.
Oats are also commonly used as horse food. In this case the oats will be deshelled and rolled. Cattle are also fed oats, either whole or ground into coarse flour using a roller mill, burr mill or a hammer mill.
Oat extract has become very popular as a skin lotion to soothe skin conditions. Oats can also be used to soften bath water when tied in a muslin bag and left to soak in the water. For medicinal purposes oat grass has been used traditionally including helping with various ailments.
Risks of Oats
Like any futures contract, there is always the possibility that the underlying asset i.e. Oats will move in the opposite direction to which you hold your contract. For example: you have taken a long position (expecting the price of oats to rise), if this were to happen and the oats fell in price, your long position in oats will decrease in value.
Amongst the grain and oilseed complex commodities oats are typically the slowest price movers. Oat futures contracts tend to have low volumes as corn, wheat, and soybeans are preferred by traders. The low amount of trading of Oats is usually because of it being one of the lowest margins among futures contracts, due to the low volatility. The idea that oats lead the grain markets means if the oat market is trending, the other grains tend to follow suit.