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Imports gain momentum as organic feed markets flounder

U.S. producers import more corn and soybeans for organic feed as harvest lags, but markets for organic commodities remain sluggish as uncertainties abound.

Prasit Rodphan |

US producers import more corn, soybeans for organic feed as harvest lags

Organic feed producers are entering the new year on an uncertain note, with markets for organic feed ingredients still defying expectations after a challenging harvest.

Nearly 15% of the U.S. organic corn crop remained unharvested as of December 1, according to commodities trading firm Mercaris. While the firm’s economists continue to see signs that the market for organic feed will respond to tightening supplies of corn and soybeans, shifts in prices and imports continue to lag behind expectations.

Imports of cracked corn, in particular, have surprised economists this fall.

“Cracked corn imports have been dead, for lack of a better term,” said Ryan Koory, a senior economist for Mercaris. While cracked corn imports were expected to rise, U.S. producers have imported just 14,000 metric tons since September, down from 40,000 metric tons imported between September and November last year.

While the growth of demand from the organic livestock sector has slowed somewhat, Koory said he thought the dramatic decline in imports of cracked corn was more likely tied to geopolitical pressure. Last May, U.S. authorities suspended the accreditation of Turkey’s Control Union Certification, forcing many producers of organic corn to seek certification from other certifying entities. The CUC’s authority to certify organic crops was suspended as a result of its failure to demonstrate sufficient knowledge of USDA organic regulations and standards, according to the U.S. agency. The Black Sea region, including Turkey, has long been suspected as a source of fraudulently certified organic grains.

More reliance on South America

Though Koory emphasized that it’s difficult to know exactly what has transpired in the Black Sea region due to a lack of information, he suspects that the need to find other sources of organic corn has forced U.S. producers to lean more heavily on another significant source of the grain: South America. Imports of whole organic corn have increased 5% so far since this time last year, Koory said, with the bulk of those imports originating in South America.

Soybeans, on the other hand, have seen increased imports as expected, though the pace so far remains slow, Koory said. From September to November, U.S producers purchased 51,000 metric tons of soybean meal, a 22% increase from last year, primarily from India. Mercaris is projecting a 30% increase in imports of organic soybean meal this year.

But imports of whole soybeans have lagged, dropping 13% year over year so far. If that trend continues, Koory said, it could have long-term ramifications for organic producers in the U.S.

“The U.S. has crushing capacity, which needs throughput to remain viable,” he said. “I had expected to see more uptick in whole beans.”

Despite the tightened supplies and ongoing growth of demand for organic feed, prices have held steady, Koory said. This spring, he said, could see increased prices if another event — such as adverse planting conditions — adds to the existing situation. But overall, he said, markets remain very difficult to predict at present.

“It’s been a challenging year, as someone who’s supposed to point to the market and say it’s gone this way, it’s gone that way,” he said, “because nothing has gone along normal lines.”

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