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Corn and wheat face supply glut, according to Mercaris organic outlook.
April 30, 2020
Larger-than-expected beginning stocks and more harvested acres have placed organic corn and wheat on a bearish trend over the 2019-20 market year, according to the new Mercaris "Organic Commodity Outlook." Meanwhile, strong demand and reduced imports have provided support to organic soybeans markets.
Mercaris, the nation’s leading market data service and online trading platform for organic, non-genetically modified organism (GMO) and certified agricultural commodities, released its spring outlook, noting that despite poor planting and harvest conditions in 2019, additional certified corn and wheat farms helped push harvests above previous estimates. In addition, corn imports rose sharply at the end of the 2018-19 market year to 12% above projections.
“Feed-grade organic corn prices have experienced a lot of pressure since last August, as harvest exceeded the industry’s expectation,” Mercaris director of economics Ryan Koory said. “With buyers expecting tighter 2019-20 supplies, a lot of organic corn was imported and stored at the end of 2018-19, putting corn markets in a perpetually long supply position this year.”
For organic soybeans, a collapse in imports from China and a reduction from Canada and the Black Sea region point to supply constraints and higher prices.
“With China and the Black Sea region sending less organic soybean meal to the U.S., domestic organic soybean crush has picked up the slack, tightening the overall U.S. soybean supply situation,” Koory said. “We may see this pressure back off this fall if we experience a good organic soybean harvest, but through the remainder of 2019-20, organic soybean prices look firmly supported.”
Additional findings from the report include:
U.S. organic corn production is estimated at 39.7 million bu. for 2019-20, up 9% from the previous outlook but still down 4% year over year.
Organic soybean production is estimated at 7.6 million bu., also up 9% from the previous outlook but down 4% year over year.
Organic feed demand is projected at 31 million bu., with organic wheat and organic corn silage making up a growing percentage of overall feed.
Organic wheat production saw a 15% year-over-year increase in 2019, at 20 million bu., driven mostly by an increase in acres in the High Plains.
For information about COVID-19-related risks to organic markets, a free Mercaris report is also available here.
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