Silver Spring, MD—Organic soybeans will fetch higher prices this year, according to Mercaris’ spring outlook. Other findings: Organic corn and wheat are on a “bearish” trend over the 2019/20 market year.
A press release explains that a collapse in organic soybean imports from China and a reduction from Canada and the Black Sea region will create supply constraints and higher prices. Ryan Koory, Director of Economics at Mercaris, said: “With China and the Black Sea Region sending less organic soybean meal to the U.S., domestic organic soybean crush has picked up the slack, tightening the overall U.S. soybean supply situation. We may see this pressure back off this fall if we experience a good organic soybean harvest. But, through the remainder of 2019/20, organic soybean prices look firmly supported.”
In the corn and wheat area, poor planting and harvest conditions in 2019 pushed estimates down—but additional certified organic corn and wheat farms helped push harvests above previous estimates. Additionally, corn imports rose sharply at the end of the 2018/19 market year, 12% above projections. Koory explained: “Feed-grade organic corn prices have experienced a lot of pressure since last August, as harvest exceeded the industry’s expectation. With buyers expecting tighter 2019/20 supplies, a lot of organic corn was imported and stored at the end of 2018/19, putting corn markets in a perpetually long supply position this year.”
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Additional findings from the report include:
- U.S. organic corn production is estimated at 39.7 million bushels for 2019/20, up 9% from the previous outlook but still down 4% year-over-year.
- Organic soybean production is estimated at 7.6 million bushels, also up 9% from the previous outlook, but down 4% year-over-year.
- Organic feed demand is projected at 31 million bushels, with organic wheat and organic corn silage making up a growing percentage of overall feed.
- Organic wheat production saw a 15% year-over-year increase in 2019 at 20 million bushels, driven mostly by an increase in acres in the High Plains.
All of that said, Mercaris has also released a special report analyzing the effect of COVID-19 on the organic market. The report suggests that the year ahead is a “gallery of serious organic market risks,” according to a second press release. Livestock processing faces plant closures and labor shortages, economic repercussions of COVID-19 threaten long-term challenges to organic market growth, and organic commodity imports could be reshaped by port closure and global currency fluctuations throughout the 2020/21 marketing year.
Koory explained: “The global spread of COVID-19 has generated a multitude of risks for organic commodity markets. With the potential to impact trade, labor, consumer demand, and the greater global economy, its ripple effects will likely be widespread and long lasting. Taking stock of these risks is crucial as we look to understand the market in the year to come and navigate this unprecedented event.” The report is available here.
For the report regarding the spring outlook—which includes data and commentary on expected yields, use, prices, and more—go here.