Organic Broadcaster

Organic corn, soybean production down in 2019

By Megan Thomas

The recently released 2019/20 Organic Commodity Outlook from Mercaris paints a picture of sharply reduced organic crop production along with an increased reliance on imports over the coming marketing year (MY). Unfavorable weather conditions and flooding resulted in losses in area and yields of both organic corn and soybeans this MY, despite expansions in the number of certified organic farm operations expected to harvest both crops. In particular, the U.S. Corn Belt suffered some of the largest organic corn production losses, with Michigan, Ohio, Minnesota, and Wisconsin totaling a combined 9,641 acres. To make up for this decline, a greater reliance on imports is expected over this MY. However, organic livestock production growth is expected to be slower over the 2019/20 MY, growing by only 1% compared to 4% growth in 2018/19. This slower growth in organic livestock production is expected to limit just how much imports will need to expand.

U.S. organic corn production levels are at their lowest since 2016/17, with Mercaris reporting a 12% collapse in production over the 2019/20 MY. In the U.S. Corn Belt region, a number of organic corn acres that were not planted this season were pushed into organic soybeans and other crops, which ultimately caused larger acreage losses in organic corn over 2019. Further, organic corn yields are expected to decline 2% year-over-year (y/y), and area harvested is estimated down 11% from the previous year. Organic corn supplies are expected to be further tightened through this MY due to reduced organic corn silage production coupled with increased demand for corn for livestock feed. Similarly, organic soybean production over 2019/20 is also expected to shrink, with Mercaris estimating a 14% y/y reduction in production following an 8% reduction in organic soybean acres harvested.

Organic livestock feed demand is up this year, but the rate of growth has slowed compared to previous years. Organic broiler slaughter plateaued over 2018/19 and only reached 53.5 million head, relatively unchanged from the previous year. For comparison, organic broiler slaughter expanded from 50 million head in 2016/17 to 53.5 million head in 2017/18 MY, a 7% increase. Similarly, organic cage-free egg layer inventories were up only 1% in 2018/19 compared to 10% expansion the previous year. Regarding dairy, organic fluid milk sales ended 2018/19 up just 1% y/y. All in all, Mercaris expects organic livestock feed demand to grow by just over 1% over 2019/20, down from 4% growth during the previous MY.

The reduced organic corn and soybean production outlook this MY along with growing livestock feed demand creates room for imports to escalate. Mercaris’ 2019/20 Organic Commodity Outlook predicts an expansion in combined organic whole and cracked corn imports of 28% y/y, with cracked corn imports outpacing whole corn. A similar outlook is presented for organic soybeans, with Mercaris anticipating buyers will continue to substitute organic soybean meal for organic whole soybean imports. Organic soybean meal imports are expected to grow 8% y/y, while organic whole soybean imports are expected to expand only 2% from the previous year.

Tighter supplies are likely to be an issue over the 2019/20 MY, with gaps in domestic production only partially filled by imports. However, this MY presents an interesting picture as U.S. organic corn and soybean production is expected to be reduced, and organic livestock production volumes seem to be leveling with the previous year. With this view in mind, it is likely that imports will furnish the gaps in domestic production to meet livestock feed demand. Slower organic broiler production will likely limit the upward pressure on prices. Similarly, escalated imports coupled with decreased livestock feed demand could create significant price risks in the market. It will be critical to keep a watchful eye on organic livestock production as well as imports as the 2019/20 MY progresses and producers look towards making up for acres lost in the following MY.

Megan Thomas is an economist at Mercaris specializing in organic livestock production as well as organic grain and oilseed markets.

From the November | December 2019 Issue


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