Mercaris Murmurmings: Organic markets stabilizing ahead of harvest

U.S. organic soybean markets appear to be stabilizing ahead of harvest. Although weather has created challenging conditions for many growers, periodic rains over the past month have helped alleviate dry conditions in portions of Michigan and Wisconsin. Overall, crop conditions have stabilized across the Corn Belt, with Mercaris estimating 63% of organic soybean acres rated in good to excellent condition as of August 15, according U.S. Drought monitor data. Additionally, the USDA’s August crop yield estimates suggest that U.S. organic soybean yields are on track to meet, if not exceed last year’s level following higher yield expectations along the southern and eastern portions of the Corn Belt, as well as across the Northeastern portion of the U.S.

Imports continued to offer mixed market signals over July. Organic whole soybean imports fell back below year-ago levels, down 8% y/y, despite increased imports from both Argentina and the Black Sea region. Increase imports from Argentina are particularly noteworthy, as reduced supplies from the country have been a major element of this past year’s reduced supply situation. With two consecutive months of increase imports from Argentina ahead of the 2021/22 harvest, it’s worth considering if these shipments will continue as the U.S. harvest adds to supplies domestically.

U.S. organic soybean meal maritime imports were lower y/y in July for the first time since August 2020, down 19% y/y. July’s decline followed a 58% y/y decline in imports from India, marking the second consecutive month of reduced imports from the country. Prior to June, U.S. organic soybean meal imports from India were remarkably larger, exceeding 250,000 MT through May of the 2020/21 MY, up 41% y/y. However, the slowing of U.S. organic soybean meal imports over the past two months could be the first signals of tightening supplies from the country.

With a stabilized U.S. production outlook and mixed imports, U.S. organic soybean prices appear to be holding steady. Over July, organic feed-grade soybean delivered to Corn Belt elevators averaged $30.12/bu, down slightly from June, but still up more than $11/bu over year-ago prices. As the 2021/22 marketing year begins, it worth considering if prices have room to fall following increased U.S. production and imports. Or will weather ultimately trim the U.S. crop as imports repeat the sluggish pace of 2020/21?