Non-GMO and Organic Market Update for October 12, 2016

Around the Markets

Imports of organic corn have slowed, which has helped subdued domestic trading activity, as investors await new crop for both the organic and non-GMO corn harvest. Rains could continue to delay the harvest, as the National Ocean Atmospheric Administration is forecasting wetter-than-normal weather throughout the Farm Belt. Organic corn prices have stabilized near the $7.50 – $7.75 per bushel range on the farm, and are $1 higher at elevators. Non-GMO yellow #2 CIF remained steady at $0.10 premium over conventional, but trade has seen old-crop delivered into conventional (flat premium), to make room for new-crop. Corn harvest should pick up in the Midwest towards the middle of October. According to the NASS Crop Progress report for the week ending October 2nd, 24% of corn has been harvested.

Corn board futures prices are forming a bull flag pattern, which represents a pause that occurs after edging higher, potentially preparing for a longer short squeeze. Traders examined the USDA’s report on yields today. Corn yields edged lower, as traders expected, while bean yields creeped higher, also in-line with expectations. According to the most recent Commitment of Trader’s report released for the period ending October 4th, managed money is short 343,500 corn contracts, a reduction of 3,500—compared to 180,000 long, which is a gain of 10,000 over the last week.

Midwest organic soybean prices are experiencing light activity ahead of harvest, which could take until the beginning of November. Positioning in the conventional market shows that hedge funds added to long positions, and reduced to short positions by approximately 4,000 contracts. Prices have drifted to the $17.50 – 17.75 per bushel range. Non-GMO soybean CIF are trading $0.75 – $1.00 above cash prices. According to the latest Crop Progress report, 36% of soybeans have been harvested.

In the News

Big Week for Majors Moving into Non-GMO

Both Cargill and Bunge announced new non-GMO certified food labels this week; the companies make up half of the “ABCD” acronym, which represents the four of the quintessential agriculture trading operations.

Cargill will market its first ever Non-GMO Project verified products for commercial sale. The food giant will offer cane sugar and erythritol sweeteners, as well as sunflower oil. The company has been producing and selling non-GMO products for several years, but this marks the first products to be certified by a third-party. Bunge, meanwhile, officially announced a new line of Non-GMO Project verified ancient grains—including millet, quinoa, and sorghum—at major industry events this month. Bunge’s newest non-GMO products are accompanied by a variety of organic soybean oil; Non-GMO Project has previously certified milled corn and rice ingredients from Bunge. (Business Wire; Reuters).

Private Equity Firm Bolsters SunOpta

A private equity firm, Oaktree Capital, has offered its support and guidnace to SunOpta, to the tune of $85 million. After takeover rumors last summer, the specialty foods firm is using the additional capital and guidance to “strengthen the company’s operations.” (PEHub).

Organic Seed Market to Expand at 14% CAGR

A consultancy has published a report looking at the organic seed market—both in the U.S. and abroad. The study forecasts a cumulative annual growth rate of 14% from 2016 to 2024. North American operations will dominate the market moving forward: they comprised 36% of market share in 2015. Asia Pacific will see a large growth rate, however, with a CAGR of 16% over the next eight years. Vegetable, fruit, and tree nut seeds are currently the dominant product varieties, and are expected to continue to grow quickly; thirty-one percent of the organic seed market volume was attributable to vegetables in 2015. The global market, this year, is valued at $1.6 billion.

It is important to note U.S. organic growers are required to use organic seeds only “when available”—there is a dearth of available seed, relative to demand from growers, and, as such, there is considerable room for expansion. (PR Rocket).

Brazil Approves Non-GMO Imports from U.S.

Northeastern Brazil pork and poultry producers have been under fire this year, as short corn supplies led to a 15% reduction in regional output. Recently, the Brazilian biosafety regulator, CTNBio, approved three new varieties of U.S. GMO corn for import, in an effort to alleviate tight market conditions. It is unclear whether Brazilian buyers will purchase more U.S. product, however, as many already sought relief, by contracting with neighboring Argentine sellers. (Reuters).

U.S. Natural and Organic Retail Food and Beverage—$69 Billion Value

According to a new research report, natural and organic food and beverage retail sales will hit $69 billion in the U.S. by the end of 2016—that figure represents a staunch 11% gain from year prior, and is part of a 7% CAGR from 2012 through 2016. Alternatively, generic food and beverage sales have remained flat over the past four years. The same natural and organic category is expected to expand by 70%, cumulatively, from 2016 to 2021. (PR Newswire).