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.