KANSAS CITY — The price for organic food-grade corn and soybeans in the fourth quarter averaged above fourth-quarter 2018 values, while durum declined, according to Mercaris, the organic and non-G.M.O. trading platform and market information company.
Organic food-grade corn prices averaged $12.83 per bu in the fourth quarter (calendar year), up $1.13 per bu from the same period last year, with no comparison for the prior two quarters.
“Organic corn prices have taken two different tracks since the start of harvest, with feed-grade prices moving mostly sideways, but food-grade showing some bullish support,” said Ryan Koory, director of economics at Mercaris. “As has been widely reported, the U.S. corn harvest has struggled this year, with Mercaris estimating U.S. organic corn harvest at 91% complete the week ended Dec. 8, more than three weeks behind the five-year average. With the delayed harvest, crop yields and quality have become a primary concern once again. Somewhat unexpectedly, this hasn’t translated into higher prices for feed-grade organic corn. However, it does appear food-grade prices are feeling the heat. Overall, market trading activity has remained tepid over the fourth quarter. However, Mercaris fully looks for activity to pick up in early 2020, after this year’s crop is fully assessed, and buyers begin to look to cover 2020 spring and summer needs.”
Organic feed-grade corn prices, meanwhile, were moving in the opposite direction. In a December market update, Mercaris noted that imports of organic feed-grade corn slowed, and domestic prices declined in the September-November period, as they typically do in the first quarter of a new marketing year (began Sept. 1 for corn and soybeans). But imports for the year were higher as buyers anticipated this year’s reduced corn harvest.
“Given the difficulty faced by this year’s crop, it is surprising that prices have fallen 4% below last year’s levels,” Mercaris said.
The market indicated strong imports and slack demand for organic feed-grade corn may keep prices subdued as the marketing year progresses.
“As the size and quality of this year’s harvest remains in doubt, it seems likely imports will continue to build as the marketing year progresses,” Mercaris said.
Organic food-grade soybean prices averaged $21.56 per bu in the fourth quarter, down $1.18 per bu from the third quarter but up 8c per bu from the fourth quarter of 2018.
“Organic soybean prices continued to slide,” Mr. Koory said. “Unlike organic corn, the organic soybean harvest progressed largely on pace. It may be the less troublesome harvest that is providing room for food-grade organic soybean prices to move lower, while food-grade organic corn prices are seeing support. That said, organic soybean purchasers shouldn’t become complacent. The outlook for this year’s crop remains poor. With 2019-20 organic soybean production projected to decline 14% year-over-year by the time harvest wraps up, the risk for prices to ratchet up over the next few months remains very real. The market seems fairly calm at the moment, which might mean we are looking at a great opportunity to capitalize on softer prices.”
Prices were quoted for organic, food-grade durum and soft red winter wheat, but not for hard red spring or hard red winter wheat due to insufficient trading volume. Durum averaged $14.06 per bu in the fourth quarter, down 82c a bu from the third quarter and down $2.43 a bu, or 15%, from the same period last year.
“The supply of organic durum this year initially looked good, with Mercaris estimating 2019-20 U.S. production to increase 30% year-over-year,” Mr. Koory said. “However, much like organic corn, harvest has been bogged down by persistent cold and wet conditions across the upper Plains states this fall. As this year’s crop is further assessed, it seems very possible Mercaris will revise down its 2019-20 production estimate. That said, the news thus far hasn’t indicated a cut to Mercaris’ production estimate to change the general supply outlook for this year. Overall, the lower prices this fall may prove to be indicative of the year to come.
“Organic soft red winter wheat prices averaged $10.12 per bu over the fourth quarter of 2019, pushing just above the $10 per bu level that has capped the market since the start of the second quarter. Overall, trading volumes remain low.”
The demand for organic feed-grade grain and soy protein is of course driven by the organic dairy and poultry markets, as livestock and poultry must consume only organic feed for their products to be classified as such. Those markets provided a mixed picture for organic feed demand.
In its December market update, Mercaris noted that organic fluid milk sales were up 7% from a year earlier, marking only the second month of 2019 in which organic milk sales increased. Organic milk sales typically rise in the third and four quarters, and Mercaris expected milk sales to end the year strong.
For poultry, organic broiler meat production in November was down 3% from October but was up 6% from a year earlier, due in part to different timing of the Thanksgiving holiday this year. For the full year, Mercaris expects broiler slaughter down 2% from 2018. Organic, cage-free egg production, meanwhile, continued to grow. Egg layer numbers were record high at 16.2 million birds in November, up 7% from 2018.
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.