Mercaris Murmurings: Drought worsens organic soybean crop

U.S. organic soybean imports saw another strong month in June. The United States imported 28,000 MT of organic soybeans in June, which is a 286% y/y increase but a 27% drop from the prior month. The majority of these imports came from Argentina, which exported 21,000 MT to the United States in June. Turkey was the next largest source with 7,000 MT. The balance came from Togo with 500 MT and China with 20 MT. Organic soybean meal imports totaled 33,000 MT in June, which is down 29% from the prior year but up 63% from the prior month. The largest exporter was Turkey with 13,000 MT. Africa also exported significant volumes, with 9,000 MT from Togo and 6,000 MT from Ethiopia. India sent 3,000 MT. India exported 3,000 MT of soybean meal while Ghana, China, and Brazil each all sent small volumes of under 500 MT each.

Domestic soybean prices declined in June after the bump seen in June. The price of feed-grade organic soybeans delivered to the U.S. Corn Belt averaged $21.00 in June, which is down $6.85 from May (though only down $1.48 from April) and down $16.19 from the prior June. Soybean markets have continued to be quiet as users work their way through their existing long stocks. Limited market activity has limited the potential for pricing volatility.

The primary area of interest for the soybean market over the past few weeks has been weather, especially the changing drought situation across much of the major growing regions of the Corn Belt. Based on Mercaris’ estimates of where organic soybean acreage is, drought conditions have worsened for the U.S. organic soybean crop. Mercaris estimates that 8.2% of the organic soybean crop is currently under extreme or exceptional drought compared to just 1.6% at this time last year. This is driven primarily by worsening drought in Iowa, Nebraska and Missouri. There has been some rain in mid-July to help alleviate the worst of the drought in some areas, but continued dryness in others will continue to push down yields if more rain doesn’t arrive soon.

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