Mercaris Murmurings: Organic soybean production likely to increase

U.S. organic soybean harvest has begun making its way north, with 6% of U.S. soybean acres harvested as of Sept. 19, according to the U.S. Department of Agriculture (USDA). Mercaris’ preliminary estimates indicate U.S. organic soybean production is likely to exceed 9.4 million bushels this year, a 15% increase from 2020.  

While harvest looks set to boost U.S. supplies this year, the outlook for imports remains less certain. Whole organic soybean imports were lower again in August, down 1% y/y as imports from Argentina remained limited. In total, 2020/21 MY organic soybean imports reached only 244,000 MT, down 17% y/y. Likewise, U.S. organic soybean meal imports were lower y/y in again in August, down 43% y/y, as imports from India continued to decline. 

Regarding import from India, August also brought the first real indication of what tariff level U.S. organic soybean meal imports from the country could possibly face beginning in 2022. The U.S. Department of Commerce (DOC) released decision memorandum in regarding its determination in the countervailing duty (CVD) investigation following a petition filed in March 2021 by the Organic Soybean Processors of America (OSPA). The DOC’s memorandum suggested a CVD rate of 7.05% to be applied in general to Indian soybean meal exporters, and a much higher CVD rate of 266.37% to be applied to 13 specific exporters who failed to comply with the DOC’s request for information.  

Another decision on possible anti-dumping duties (ADD) is set to be released in October, which could see an additional 158% ADD rate applied to all soybean meal imports from India. While the final determination on these tariffs will not be set until late January 2022 at the earliest, the possibility of significantly tariffs is likely to weigh on organic soybean meal imports leading up to the final determination, and through out the marketing year ahead.  

On balance—with a potentially large U.S. harvest, and uncertain import outlook—U.S. organic soybean prices appear to be holding steady-to-slightly bullish. Over August, organic feed-grade soybean delivered to U.S. corn belt elevators averaged $32.08/bu, gaining nearly $1.50/bu from July, and up more than $11/bu over year ago prices. Although U.S. production is likely to offer some relief to persistently tight U.S. organic soybean supplies, the greater risk of disrupted trade may easily offer additional bullish price support as 2021/22 marketing year progresses. 

Mercaris, the nation’s leading market data service and online trading platform for organic and non-GMO agricultural commodities, is an SSGA member and a monthly contributor to the SSGA E-newsletter.