Prices for organic food-grade grain and soybeans in the September-October period declined from July-August, after also declining from the prior two-month period in August-September, Mercaris, the organic and non-G.M.O. trading platform and market information company, said. Prices were mixed compared with the September-October period of a year ago.
Food-grade organic prices for hard red spring wheat and soybeans both were down from a year ago, but corn prices were up slightly. Prices for soft red winter wheat and durum were not quoted for the latest period.
“Organic hard red spring wheat prices continued to decline, with some trades reported below $14 per bu in October,” said Ryan Koory, senior economist at Mercaris. “Hard red spring peaked this year at nearly $20 per bu in the second quarter but has since moved steadily lower. Increased wheat supplies this year are an element of the bearish path the market has taken, but Mercaris has also heard from buyers who have indicated organic wheat protein levels are lower this year, leading to lower prices and increased need for higher protein wheat for blending. Over the next few months it appears food grade wheat will have a difficult time finding price support. With supplies looking positive, and protein content anecdotally lower, hard red spring wheat prices look stuck below last year’s level for the time being.”
Hard red winter wheat prices were taking a path similar to that of hard red spring wheat — lower.
“Organic hard red winter wheat prices continued to decline, falling below the $10 per bu range for the first time since the fourth quarter of 2017,” Mr. Koory said. “Like hard red spring, hard red winter has struggled to find price support since the end of quarter one.”
Prices for organic food-grade durum were not quoted by Mercaris because trading was slow and volume was below the quotable level, Mr. Koory said.
Food-grade organic corn and soybean prices also declined from the prior two-month period but were mixed from a year ago with corn slightly higher and soybeans slightly lower.
“Organic corn prices continued moving lower, approaching $10 per bu at the close of October,” Mr. Koory said. “Contracting volumes have remained steady, as the U.S. organic corn harvest has progressed more or less on pace with the five-year average, adding to supplies for spot and forward contracting. Feed grade imports appear to have more or less stabilized at the end of quarter three after spending almost all of 2018 in decline.
“Although nearly all U.S. organic corn imports are directed toward animal feed, the stable flow of imports is bearish for feed grade corn prices, which impacts marketing decisions for producers of both food and feed grade organic corn. Add to this the bearish pressure from the on-going U.S. harvest, and it is likely food grade organic corn prices will remain mostly subdued over the next several months.”
Soybean prices saw the smallest decline from July-August compared to corn and wheat.
“Organic soybeans declined slightly but remained in the $21 to $22 per bu range for the seventh two-month period in a row,” Mr. Koory said. “The price outlook for organic food-grade soybeans is a bit of a mixed bag at the moment. The yield outlook for the U.S. organic soybean crop remains largely positive. However, many locations have experienced delayed harvesting following rainy conditions, which has slowed the flow of soybeans to the market and has begun to raise some yield loss concerns. Additional weather issues may provide some bullish support to organic food-grade soybeans over the near term. However, U.S. organic soybean production is still expected to increase 15% year over year for 2018-19. Once these supplies start to flow into the market, it may become difficult for prices to hold onto their current levels.
“Previously, we have discussed the tendency for food-grade organic soybeans to rebound at the end of the year following an increase in contracting activity. So far quarter four has not seen an increase in contracting, with prices holding mostly steady. It is still likely buyers will begin to lock-down more contracts over the next few months. However, given the bearish supply potential, soybean prices may not be in store for a rally before the end of the year.”
Mercaris indicated harvest of organic corn (both food grade and feed grade) was about even with the five-year average early in November, with Idaho, Indiana, Michigan, Washington and Wisconsin all a week or more ahead of the average pace.
But the organic soybean harvest was running behind average, with Kansas, Missouri, New York, North Dakota and Pennsylvania more than 10% behind the average pace and many other states at least 5% behind. Some loss was expected from fungus damage and pods bursting, but yields have been positive.
“All-in-all, the wet conditions are not likely to cause major supply issues for U.S. soybean markets,” Mercaris said.
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.
