Organic grain buyers turn to imports to meet demand
By Kevin Hurlbut, FW Cobs
While the demand for organic feed continues to grow, the U.S. market has seen an increase in imported organic corn and soybeans. While many people question the integrity of this product, it does have to comply with NOP standards.
Imports have been part of the market for a few years, but have flooded the market in the past year. Feed mills on the east and west coast, along with Midwest mills have increased their usage. Since there is not enough organic corn and soybeans grown here in the United States, buyers had no other alternative but to find different avenues for grain.
While organic corn and soybeans are still sold at a very high premium to the conventional price, many producers have seen much lower prices than the $10-12/bushel price for organic corn that they have become accustomed to.
Back in the summer of 2012, the price of domestic organic corn traded as high as $17/bushel. Demand was growing at a much faster pace than what U.S. producers could supply.
The strength of the U.S. dollar also is playing an impact in the cheaper price of imports. While the dollar continues to be strong, we could see the price of domestic organic corn trade under $8/bushel.
Since the organic market has become more global, we continue to try to push for a price premium for domestic grown product. While most mills would much rather use domestic products, running their businesses and being competitive will have an impact on their decision making. While imports seem like they are here to stay, the strength of the dollar in the coming years will play a pivotal role in how those imports are priced.
The outlook for the coming year remains steady. There could be some inventory carried over from last year’s crop to go along with a potentially big 2016 crop. With imports now filling in the gaps, it looks as though there will be enough supply to fill the growing organic demand. With such growth, the future for the organic market looks strong and producers should continue to see great price premiums compared to conventional markets.
Kevin Hurlbut is a grain merchandiser at FW Cobs Company. FW Cobs Company purchases organic feed grain throughout the Midwest and Canada.
From the September | October 2016 Issue