Mercaris Murmurings: Organic soybean markets risky and unsettled

With 2022 in full swing, and organic soybean markets as unsettled and risky as they have ever been, it’s worth taking a moment to size up the market’s overall position. First, looking at U.S. supplies Mercaris estimate U.S. organic soybean production reached 86,000 MT over the 2021 harvest, up 15% y/y (11,000 MT). As has been heavily reported, the primary risk for 2022—and likely the next couple of years—is imported organic soybean meal sourced from India, which accounted 43% of U.S. total organic soy supplies over the 20/21 marketing year, and reached a record setting 333,000 MT. Resulting from multiple factors—none of which are likely to be resolved in the near future—imports of Indian organic soybean meal have plummeted this year, down 77% y/y over the first four months of the 21/22 MY, or a deficit of nearly 112,000 MT relative to last year.

With the deficit in imports from India, the question of supply over the next year rests entirely on the ability of the U.S. to source organic soy from other markets. Thus far, imports from Argentina, who is the largest forging supplier of whole organic soybeans to the U.S., have increased 40% y/y over the first four months of 2021/22. But, this increase in reality only stacks up to an additional 8,000 MT of organic soybeans. Imports from Canada are up an astounding 199%, adding 10,000 MT of organic soybeans to U.S. supplies—relative to last year. However, and despite these gains, imports on the whole have not responded strongly thus far. Combined imports from India and the Black Sea region have fallen by more than half, down nearly 32,000 MT. In total, U.S. organic whole soybean imports have only reached about 64,000 MT over the first four months of 2021/22, or down more than 13,000 MT y/y.

To round out organic soybean imports, organic soybean meal imports from countries other than India have responded strongly, up nearly 350% y/y. However, this is only a net-gain of 50,000 MT, less than half of the loss of organic soybean meal imports from India. So, to sum up, through the first four months of 2021/22 organic soybean supplies are down about 2,000 MT, while organic soybean meal imports are down more than 61,000 MT.

To generally describe the current U.S. organic soybean market condition as tight appears to be accurate at the start of 2022. In terms of marketing organic soybeans over the remainder of this winter, and into spring, there currently appears to be very little to suggest any significant amount of bearish price pressure will appear soon. The longer-term perspective, into this summer and approaching the 2022 harvest, it’s possible some of price relief may manifest if imports from the Black Sea region and from Latin America show signs of improvement. However, thinking about prices over the 2022 fall, a lot will depend on how much U.S. organic soybean acres can respond to the current situation and 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.