Demand Pushing Organic Corn Toward $15

Despite tight feed supplies and pay-price differences, organic milk outlook healthy.

Published on: Jul 21, 2011

Tight corn supplies are pushing Northeast organic corn prices towards $15 a bushel. First-crop forage quality, particularly in eastern New York and New England suffered with the wet spring. That's going to make the fall corn and corn silage harvest more crucial to dairy profits, especially organic dairy profits, says Ed Maltby, executive director of the Northeast Organic Dairy Producers Alliance.

In an analysis posted Monday at NODPA, Maltby said: "As feed prices increase and work their way through the system and into new contracts for 2011 and 2012, the costs of inputs for this winter are uncertain at best. There also appears to be a difference between the two major national companies, CROPP/Organic Valley and WhiteWave/Horizon Organic, in how they respond to the needs of producers who have significant increases in feed and overhead inputs."

MORE O-MILK MAKERS WANTED:  Major organic milk processors have opened the gate for more certified organic milk producers.
MORE O-MILK MAKERS WANTED: Major organic milk processors have opened the gate for more certified organic milk producers.

Organic milk demand still appears to be strongest in the Northeast. In the Northeast, the difference between Organic Valley and Horizon Organic in pay price varies $1.50 to $2 per hundred pounds of milk. Here's how it breaks out for August:

Organic Valley will pay a $0.16 per hundredweight dividend for all milk shipped in 2010 and will increase its pay price by up to a dollar per hundred with an increase of $0.05 per pound on their butterfat premium; adding $0.30 per hundred to their national premium, and a $.50/cwt Market Adjustment Premium.

Horizon Organic will also raise their MAP by $1 for the six eastern states. But any differential in pay price will remain the same, with Organic Valley paying the higher price. In other parts of the country, Organic Valley and Horizon are closer to each other on an average pay price.

Both processors are looking to sign up more producers. Both have lifted restrictions on production either through a quota or by contract. While organic milk supplies are still in slight surplus in the West, processors are looking to specific geographic areas to increase their production, mostly in the East.

Both companies have absorbed producers from companies that have left organic. "There's still some 'poaching' of producers from each other," reports Maltby.

With increased feed, energy costs and overhead expenses, producers are asking for an increased pay price, especially for winter production. For most, an increase of $4 will enable them to start re-investing in their farms again, he adds.