The supply of organic soybeans is expected to decline due to slowing imports, while organic corn imports are expected to rise during the current harvest season. According to price reporting agency The Jacobsen, this should weigh on organic corn prices, continuing the divergence between organic soybean prices and organic corn prices.
The agency noted that U.S. demand is reliant on organic grain imports because approximately 20% of organic corn currently used for feed in the U.S. is imported. Approximately 70% of the organic soybeans and organic soybean meal consumed in the U.S. are imported, with most coming from India.
Corn prices lower; soybean prices supported
According to The Jacobsen, imports of organic whole corn and organic cracked corn are expected to rise by approximately 8% during the balance of the 2019-20 season, climbing to 16.2 million bu.
With demand expected to remain unchanged year over year, the agency said the stocks-to-use ratio is expected to climb, generating headwinds for organic corn prices. For the 2019-20 season, the firm sees organic corn prices that are picked up at the farm in the Midwest averaging $8.30/bu., down from $8.60 seen during the 2018-19 harvest season.
On the soybean side, The Jacobsen said imports of organic soybeans during the 2018-19 season dropped by nearly 100,000 metric tons and were replaced by a similar volume of organic soybean meal. As such, the decline in organic soybean imports into the U.S. reduced the number of organic soybeans available to crush.
“Organic soybean prices have hit multiyear highs and are likely to continue to remain buoyed as imports of organic soybeans to the U.S. continue to slow,” the agency said, adding that it expects organic soybean imports from India, the largest exporter of organic soybeans to the U.S., to decline 40-50% during the 2019-20 season due to a poor harvest.
The Jacobsen expects the stocks-to-use ratio of organic soybean meal to decline substantially during the 2019-20 season. In addition, the U.S. harvest saw an approximately 22% decline in organic soybean production.
This puts the average price of organic soybeans for the harvest season up to $21/bu., with prices likely topping out for organic feed grade soybeans at $23/bu., the agency said.