Mercaris Murmurings: Organic soybean production likely to increase

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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.

Mercaris Murmurmings: Organic markets stabilizing ahead of harvest

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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?

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. Be sure to check out an interview with Mercaris CEO Kellee James on SSGA’s IP-ODCAST.

Mercaris Murmurings: Organic soybean markets remain unsettled

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U.S. organic soybean markets remained unsettled over June, following an unsettled outlook for production, imports and prices. Across the U.S. Corn Belt, the outlook for organic soybeans has generally improved as much-needed precipitation helped ease drought conditions across Iowa, Michigan and Wisconsin. The exception to this trend appears to be Minnesota, with the U.S. Drought Monitor reporting 100% of the state experiencing drought conditions the week of July 20 and 4% of the state experiencing extreme- to exceptional-drought conditions. Overall, Mercaris estimates that 61% of organic soybean acres across the Corn Belt were rated in good to excellent condition as of July 18, down slightly from 69% last year.

While the U.S. crop outlook has improved slightly, the pace of import has also picked up speed. In June, U.S. organic soybean imports saw their largest month since the start of the MY, pushing above levels of a year ago by nearly 20%. The month saw imports from Argentina reach their highest level since June 2020, while imports from the Black Sea region reached their highest levels since September 2020.

U.S. organic soybean meal maritime imports also remained higher year over year for the 10th month in a row, up 7% year over year. That said, June did see the first substantial decline in organic soybean meal from India, which declined to its lowest level since October 2018, down 26% y/y. Ultimately, organic soybean meal imports for the month were supported by shipments from Turkey, with the United States importing nearly 12,000 MT from the country over the month.

Despite indications that U.S. organic soybean supplies might improve over the remainder of the marketing year, prices continue to reflect a tightening U.S. supply situation, with organic feed-grade soybeans delivered to U.S. elevators averaging $30.41/bu during June, up $3.37/bu from May and gaining $11/bu over 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.

Mercaris Murmurings: U.S. supplies continue to tighten

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Over the month of May, market conditions for organic soybeans continued to indicate tightening U.S. supplies. Over the month, organic soybean imports declined to their lowest level since November 2011 as the U.S. did not import organic soybeans from Argentina, India, Russia or the Black Sea region. The month did see further expansion of U.S. organic soybean imports from Africa, with the majority of U.S. organic soybean imports originating from the country of Togo. 

Organic soybean meal maritime imports continued to show signs of slowing relative to the start of this MY, up only 11% y/y compared to up 83% y/y over the first half of 2020/21. In general, the remainder of 2020/21 is likely to see organic soybean meal imports slow relative to the start of the MY, as Indian supplies are tightening and transportation logistics remain challenging. Imports from the Black Sea region may offset this trend if higher prices and limited soybean supplies in the U.S. persist through the summer months. 

Overall prices continue to reflect a tightening U.S. supply situation, with organic feed-grade soybean delivered to U.S. elevators averaging $25.92/bu during May, up $14% from the prior month, and up nearly 26% y/y. 

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.

Mercaris Murmurings: Organic soybean prices continue to climb

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U.S. organic soybean prices continued to climb in May, averaging $25.46/bu delivered to the U.S. Corn Belt over the first two weeks of the month. Mercaris’ Market survey even captured some contracts coming in at more than $35/bu.  

Market prices continue to increase as domestic organic soy supplies have become squeezed due to lower–than–anticipated imports. Imports from Argentina have been particularly low this year, down nearly 45,000 bu through April of the 2020/21 MY compared to 2019/20. With tight supplies pushing feed-grade soybean prices well above the food-grade market, purchasers have begun securing contracts for food-grade soybeans to be shipped to organic feed processors. If this trend persists, the market for food-grade beans is likely to begin tightening, adding support to food-grade organic soybean prices as well. 

With the short feed-grade soybean market tapping into food-grade soybean supplies, both farmers and purchasers may find themselves in a challenging position as they consider planting procurement decisions. For food-grade soybean purchasers, if the chance to sell $30/bu organic feed-grade soybeans this fall entices enough farmers to pass up signing food-grade soybean contracts this spring, then food-grade soybean will likely be in short supply over the next year. 

For organic farmers, managing marketing risks is particularly difficult, as prices over the rest of this year will largely be decided by U.S. imports. With Indian supplies under scrutiny, and imports from Latin America unexpectedly low, the outlook for tighter feed-grade soybean supplies over the next year appears very real. However, the risk of reduced Indian soybean exports may be much smaller than it first appears, and high U.S. organic soybean prices are a strong incentive to source soybean from foreign markets. The possibility of U.S. organic soy imports escalating quickly over the rest of this year is very real and could very easily bring an end to this period of exceptionally high prices by harvest this year. 

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 newsletter.

Mercaris’ Murmurings: Imports prop up organic soybean meal supplies

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Considering all of the challenges faced by U.S. organic soybean markets, the first quarter of 2021 ended with the U.S. supplies being propped up by organic soybean meal imports. According to Mercaris Maritime Import trade data, U.S. organic soybean meal maritime imports exceeded 38,000 MT over March, 26% more than March 2020. March’s imports were consistent with the trend U.S. organic soybean meal imports have held since the start of the 2020/21 marketing year, with imports up 73% y/y from September 2020 through March 2021. In contrast to meal imports, whole organic soybean imports were much lower over March, down 47% y/y to about 12,000 MT. 

The growing gap between the imports of whole organic soybeans and organic soybean meal is a key piece to the difficult marketing situation that has developed around organic soybeans over the first quarter of 2021. Beginning with the USDA NOP’s January announcement that it would be ending its organic equivalency agreement with the government of India, and most recently propelled by the Organic Soybean Processers of America’s petition to impose anti-dumping duties against Indian organic soybean meal, the reliability of organic soybean meal imports from India has become uncertain. Under this uncertainty, U.S. organic soy purchasers have quickly moved to secure supplies, driving feed-grade organic soybean prices sharply higher. According to Mercaris’ market price survey, organic feed-grade soybeans delivered have increased 17% since the NOP’s announcement, averaging $23.26/bu delivered to U.S. Corn Belt locations over the month of March. Additionally, March saw the price range around contracts widen significantly, with some spot delivery contracts reported as high as $29/bu delivered. 

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 newsletter.