Mercaris Murmurings: Organic soybean prices still strong

Organic soybean prices remained strong into November, even as the end of harvest nears. As of Nov. 14, Mercaris estimated U.S. organic soybean harvest at 88% complete, putting it on pace to be nearly complete by early December. With harvest steadily progressing, yields continue to look positive, suggesting that Mercaris pre-harvest estimate of 37.5 bushels per-acre may need to be revised higher.

Despite the prospect of an excellent U.S. harvest, the market appears supported by a persistently tight outlook for U.S. organic soy imports. Over the first two months of the current market year, U.S. organic soybean imports only reached 22,900 MT according to Mercaris estimates, down 60% year-over-year. Likewise, maritime imports of organic soybean meal reached 62,300 MT according to Mercaris estimates, down 68% y/y.

Adding to the bullish support currently offered by imports, October brought two developments that could lead long-term price support. First, on Oct. 20 India’s Agricultural and Processed Food Products Export Development Authority (APEDA) issued a decision barring four organic certifying agencies (CU Inspections India Pvt Ltd, ECOCERT India Pvt Ltd, Indian Organic Certification Agency, Aditi Organic Certifications Pvt Ltd) from registering any new processors or exporters of organic products.

Furthermore, APEDA issued a year-long suspension for OneCert International, effectively prohibiting the organization’s ability to provide organic certification altogether. This announcement will likely impede the re-certification efforts many Indian operations are pursuing following the National Organic Program’s (NOP) January decision to end its recognition agreement with India, making it difficult to achieve recertification by the July 12, 2022 deadline set by the NOP.

Second, the Department of Commerce (DOC) released a Decision Memorandum regarding its determination in the anti-dumping duty (ADD) portion of its investigation of organic soybean meal from India. In the memorandum, the DOC determined that Indian-sourced organic soybean meal is likely being sold in U.S. markets at less than fair market value, thus warranting an ADD in addition to the CVD. The DOC’s ADD findings were split along the same adverse facts available (AFA) line as the CVD finding. For those who were assessed the rate of 266.37% in August’s CVD finding, the DOC determined that an ADD rate of 18.85% is appropriate. For those who were not assessed the AFA rate, the DOC determined that an ADD of 3.11% is appropriate. However, the ADD is based on the DOC determining that Indian organic soybean meal is being sold at below-market prices in the U.S. As part of this finding, the DOC also determined 7.02% offset should be applied to the ADD rate based on the potential impact of Indian subsides. As a result, non-AFA operations will potentially face an ADD of 0% (3.11% – 7.02%). For all others, who were assessed the AFA rate, their affective ADD rate will be 11.83% + (18.85% – 7.02%).

Under these conditions, U.S. organic soybean prices have declined only slightly. Over October, organic feed-grade soybean delivered to U.S. Corn Belt elevators averaged $31.90/bu, down $0.70/bu from September but still $12.65/bu above year-ago prices.

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.