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Organic Grain Marketing and Price TrendsFebruary 2020Jessie Bovay
Introduction To Mercaris Organic Supply Picture Understanding Organic Demand Organic Corn and Soy Premiums Marketing Options
OVERVIEW
Market Data Service & Trading Platform
for organic, non-GMO, and other Identity-Preserved (IP) agricultural commodities
Organic markets are… different Thin markets
Limited risk management options
Market transparency issues
Limited organic processing and storage availability
Consumer demand
Mercaris Data ServiceMake Informed Business Decisions
MERCARIS DATA SERVICES
Screenshots, Mercaris Data Service Reports
Volume Weighted Average Prices Spot & Forward Food & Feed U.S. Regional Canadian
IP vs. Conventional Price Tracking Trade Volume Reports Acreage Infrastructure/Mapping Demand Analysis
DATA SOURCINGMercaris Market Survey
Over 50 different first handlers participate weekly in the Survey, averaging 15 new data points a week
The reported bushels represent 25% of the organic bushels grown in U.S. and Canada
34 states/ provinces are represented in the Survey
Six years of historical archives
Commodities reported:
Organic cornOrganic barleyOrganic soybeans
Organic soybean mealOrganic oatsOrganic wheat
Organic ryeNon-GMO cornNon-GMO soybeans
SUPPLY PICTUREMercaris Estimated 2019 Total U.S. Organic Crop Land Acres Harvested
19.0
20.8 23.3
25.4
0
5
10
15
20
25
30
35
2015/2016 2016/2017 2017/2018 2018/2019
Org
anic
Soy
bean
s M
illio
n Bu
shel
s
U.S. Production Imports*Source: Mercaris, USDA, USCBP* Imports include organic SMB adjusted to whole bean equivalent values
76% of US Supplies
21.1
21.0
15.6 16.1
0
10
20
30
40
50
60
2015/2016 2016/2017 2017/2018 2018/2019
Org
anic
Cor
n M
illio
n Bu
shel
s
U.S. Production Imports*Source: Mercaris, USDA, USCBP* Imports include organic cracked corn
28% of US Supplies
SUPPLY PICTURE
UNDERSTANDING DEMAND
Subcategory 2018Sales
2018Growth
Fruit & Vegetables 17,374$ 5.5%Breads & Grains 5,408$ 6.4%Beverages 6,461$ 8.8%Snack Foods 2,824$ 7.2%Packaged & Prepared Foods
6,270$ 7.8%
Condiments 1,723$ 5.8%Dairy 5,651$ -0.8%Eggs 858$ 9.3%Meat, Poultry & Fish 1,292$ 11.4%Total 47,862$ 5.9%Source: Organic Trade Association, Mercaris Ca lculations
The U.S. total organic market in 2018 broke through the $50 billion mark for the first time, with sales hitting a record $52.5 billion, up 6.3 percent from the previous year.
ORGANIC CORN AND SOY PREMIUMS
Organic corn averaged $5.75/bu (168%) over conventional and $601/acre (91%) over conventional
Organic* Conventional‡ Organic* Conventional‡ Organic* Conventional‡ Organic* Conventional‡
MY Average Price2 $9.31 $3.56 $8.25 $3.37 $9.57 $3.34 $9.50 $3.49Yield (bu/acre)4 115.4 175.0 143.2 197.0 146.0 201.0 152.1 210.0 Revenue Per Acre $1,074.85 $623.29 $1,180.92 $664.71 $1,396.61 $670.34 $1,444.49 $732.48Organic Premum Per Acre
MY Average Price3 $20.64 $9.34 $18.67 $9.56 $19.34 $9.31 $19.23 $8.27Yield (bu/acre)4 44.6 56.0 45.9 59.0 45.2 58.0 48.8 65.0 Revenue Per Acre $920.69 $522.95 $856.84 $563.79 $874.02 $540.03 $938.23 $537.68Organic Premum Per AcreSource: *Mercaris, ‡USDA
2018/191
$712
$401
Corn
Soybeans
$452 $516 $726
$398 $293 $334
Notes: 1. Based on observations from Sep 2018-June 2019, 2. Corn organic prices are Corn Belt average delivered to first handler, conventional prices are USDA Central Il, Yellow No. 2 delivered3. Soybean organic prices are Corn Belt average delivered to first handler, conventional prices are USDA Central Il, Yellow No. 1 delivered4. Average yields for Illinois
2015/16 2016/17 2017/18
Organic soy has averaged $10.18/bu (109%) over conventional and $345/acre (62%) over conventional
DISRUPTORS
MARKETING OPTIONS
Local markets
Regional buyers/ Cooperatives
National CPG’s/ beverage companies
International direct sales
Secure, centralized transactions
Real-time price discovery
Ensures credit worthiness, contract performance
Ability to host auctions, bilateral trades, or continuous cash markets
MERCARIS ONLINE TRADING PLATFORM
CONTRACTING
Traditional spot/ forward contracts
Acreage/ production contracts
Whole rotation contracts
Transition contracts/ loans/ leases
Barter/ trade
IP agreements
MARKETING OPTIONS
Final Thoughts
Get certified
Producer networks
Land lease/ rental
On-farm storage
Do buyer research…
MARKETING OPTIONS
