KANSAS CITY — Prices for organic food-grade hard red winter wheat in January-February advanced from the prior two-month period and were well above the year-ago level, while corn prices edged higher and soybean prices declined, according to Mercaris, the organic and non-G.M.O. trading platform and market information company.
Hard red winter wheat averaged $14.21 per bu in the January-February period, up $1.59 from November-December, up $4.29 from September-October and up $3.34 from a year ago, according to Mercaris.
“Organic hard red winter wheat continues to pull ahead of last year’s prices,” said Ryan Koory, senior economist at Mercaris. “The 2018-19 winter wheat crop protein levels were anecdotally lower than the prior year, which has likely been the factor supporting prices over the past year. However, with spring approaching, and with it the harvesting of winter wheat, it is likely the market will see prices break before the end of May. How much prices will break is largely dependent on the quality of a crop that has yet to make it out of the field.”
Prices for food-grade, organic hard red spring wheat, soft red winter wheat and durum remained unquoted as they have been for the past several months due to slow market activity.
Food-grade organic corn averaged $12.41 per bu in January-February, up 15c from November-December, up $2.15 from September-October and up $2.60 from a year ago, Mercaris data showed.
“Organic corn contract prices continue to hold a substantial premium over 2018,” Mr. Koory said. “Over January-February, the delivered organic food-grade corn price averaged $12.41 per bu, up $2.60 per bu from a year ago. This is in stark contrast to organic feed-grade corn, which has seen prices trend below year-ago levels since the start of 2019. So far, the 2018-19 marketing year has seen feed-grade organic corn imports move steadily higher, likely weighing down feed-grade prices. However, the cause of the price rally seen in food-grade is a bit harder to single out.
“Overall, U.S. organic corn production growth slowed in 2018, likely tightening the U.S. supply of food-grade organic corn. Adding to this, unlike feed-grade corn, food-grade organic corn is sourced almost entirely from domestic producers. As a result, any increase in organic corn imports is likely to have a muted impact on prices. Unless a significant quantity of food-grade organic corn remains unspoken for in grain silos across the United States, it is unlikely food-grade prices will face any bearish pressure over the next few months.
“However, if the flow of U.S. organic corn imports significantly tightens, then we could see more bullish pressure enter the market as U.S. organic livestock operations go shopping for more domestic supplies.”
Organic food-grade soybean prices in January-February declined from the prior two-month period and were about even with the year-ago price. Soybeans averaged $20.40 per bu in the latest period, down $1.51 from November-December, down $1.18 from September-October and down 3c from a year earlier.
“Organic soybean prices have been stuck at a discount to last year’s level since the start of the 2018-19 marketing year,” Mr. Koory said. “However, with the beginning of 2019 and the end to marketing of the fall crop, food-grade organic soybean prices have been on the rise and nearly closed the gap with 2018 in February. Thus far, March is on track to see food-grade soybean prices punch well above last year’s level, with some trades closing near the $24-per-bu level.
“It is not uncommon for soybean prices to find bullish support as winter comes to an end. However, the magnitude and pace of the market’s climb is a bit surprising. In general, U.S. organic soybean supplies appear robust, despite the recent decline in organic soybean imports. Given what appears to be tenuous support for prices, it appears the bullish market that has developed may have a difficult time persisting through the spring.”
Kellee James, founder and chief executive officer of Mercaris, will make a presentation on the state of the organic market at the 2019 Sosland Publishing Company’s annual Purchasing Seminar June 9-11 in Chicago.
Mercaris is a comprehensive source of market data and online trading for feed-grade and food-grade organic and non-G.M.O. commodities based in Silver Spring, Md. For more information visit www.mercaris.com. Sosland Publishing Company runs this food-grade organic grain price report in the second issue of Milling & Baking News each month.