Amidst a backdrop of increasing U.S. supplies, prices for grains, oilseeds, and organic commodities are showing signs of decline following a period of turbulence.
The most substantial declines are evident in organic prices, with organic corn priced at $8.50 to $9 per bushel in mid-November, a notable drop from last year’s $12 per bushel. Organic soybeans have experienced a more than 50% decrease, according to Ryan Koory, Vice President of Economics for Mercaris, a company tracking organic and non-GMO commodity trading.
Conventional corn and soybean prices have also witnessed significant decreases below last year’s highs, driven by factors similar to those impacting organic prices, indicating an overall oversupply in commodities. The U.S. Department of Agriculture’s November World Agricultural Supply and Demand Estimates reveal that corn and soybean supplies are outpacing demand, with higher yield estimates contributing to increased stocks.
The surplus of organic commodities is attributed more to increased production than yields, as high prices in recent years led to expanded acreage dedicated to organic corn and soybeans. Now, with supply surpassing demand, these acres may return to pasture or be left fallow.
The possibility of organic producers reverting to conventional crops exists if prices continue to decline in the coming years. However, the outcome remains uncertain, and the recent slowdown in organic poultry production, driven by high feed prices, might reverse with the anticipated fall in prices. Koory notes that organic producers have expressed intentions to expand poultry production in response to strong consumer demand.
Consumer demand will likely play a crucial role in determining the extent of expansion in the upcoming year. Despite concerns about a potential recession last year, current macroeconomic trends suggest a diminished risk of recession.
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