The supply of organic soybeans is expected to decline due to slowing imports. Organic corn imports are expected to rise during the current harvest season, which should continue to weigh on organic corn prices. For the balance of 2020, The Jacobsen sees this divergence between organic soybean prices and organic corn prices continuing.
The Need for Imports
U.S. demand is reliant on organic grain imports into the United States. Approximately 20% of the organic corn that is used for feed in the U.S. is imported.
Approximately 70% of the organic soybeans and organic soybean meal that is consumed in the U.S. is imported. Most of the imports that make their way into the U.S. are exported from India.
Organic Corn Price Forecast
Imports of organic whole corn and organic cracked corn are expected to rise during the balance of the 2019/2020 season by approximately 8%, climbing to 16.2 million bushels.
With demand expected to remain unchanged year over year, the stock-to-use ratio is expected to climb, generating headwinds for organic corn prices. For the 2019/2020 season, The Jacobsen sees organic corn prices that are picked up at the farm in the Midwest averaging $8.3, down from $8.60 seen during the 2018/2019 harvest season.
Organic Soybean Price Forecast
During the 2018/2019 season, imports of organic soybeans dropped by nearly 100,000 metric tons and were replaced by a similar volume of organic soybean meal.
The decline in organic soybean imports into the U.S. reduces the number of organic soybeans available to crush. Organic soybean prices have hit multi-year highs and are likely to continue to remain buoyed as imports of organic soybeans to the U.S. continue to slow. The Jacobsen expects that organic soybean imports from India, the largest exporter of organic soybeans to the U.S., will decline by 40-50% during the 2019/2020 season due to a poor harvest.
The Jacobsen expects the stock-to-use ratio of organic soybean meal to decline substantially during the 2019/2020 season. In addition, the U.S. harvest saw a decline in organic soybean production by approximately 22%. This puts the average price of organic soybeans for the harvest season up to $21 per bushel, with prices likely topping out for organic feed grade soybeans at $23 per bushel.
For more information, contact George Morris at george@thejacobsen.com or 303.775.4213.
