Organic Corn Prices Break Below the $8 Level; Poised to Test 2016 LowsThe clearing of bins ahead of planting season is weighing on organic corn prices
Organic corn prices mid-west picked up at the farm have dropped below $8 per bushel level. Prices for spot loads are trading near $7.75, as farmers are clearing out their bins ahead of the planting season. There appears to be a concerted effort in the mid-west to purge spot organic corn, and consumers are lower their bids.
Merchandisers have quoted prices in the South-Central PA region at $10.65 per bushel for Q4, and with approximately a $2.5 freight and loading charge to reach the mid-west, Q4 prices should be trading near $8.15 for the Q4. Organic corn prices are poised to test support near the 2016 lows at $7.40.
There is a combination of issues that are dragging on prices. First, most consumers are covered for the balance of Q1 and Q2 fo 2020. There is plenty of corn around, in bins, looking for a home. Additionally, a decent quantity of the organic corn this year has a test weigh below 54. While some merchandisers will accept organic feed corn #2 at a 52-test weight with a discount (of approximately 5 cents per pound), others are rejecting the corn which is creating additional headwinds for prices.
There also appears to be strong demand for organic corn with test weights that would place it at #1, which is 56 and above. The Jacobsen has heard that there is a robust premium for #1 organic corn which could be up to $1 per bushel. This would be used to mix with lower test weight corn to achieve 54 test weight.
There is also an accelerating number of farmers concerned that there could be too much precipitation again in 2020. Their concern stems from a recent report from the National Weather Service who is warning there is a high risk of flooding again this spring in the mid-west especially in areas that are still saturated. Additionally, farmers are concerned that levee fixes will not take place expeditiously, which will buoy insurance premiums for affected areas.