U.S. soybean prospects have improved slightly overall in the past two weeks, according to CropProphet, with the U.S. yield and production forecasts rising to 48.3 bushels per acre and 4.28 billion bushels (see figures below). Owing to the record acreage, the most likely production total is now only 0.5% below last year’s record, although the expected U.S. yield is only 1.5 bushels per acre above trend.
The improvement of the past two weeks occurred quite widely across the major soybean growing areas (see figure above), with the notable exception of Iowa, which continues to experience significantly below-normal rainfall. Over 40% of the state is now classified in drought, with portions of 23 counties now in severe drought. The figure below shows the correlation between August rainfall and soybean yield anomaly (departure from trend), illustrating that soybean yields are very sensitive to August rain amounts throughout the central and southern U.S. As a consequence of this sensitivity, the CropProphet soybean forecasts rely just as heavily on August predictors as on July predictors, and the yield forecast accuracy continues to improve significantly during the month of August. In contrast, the CropProphet U.S. corn forecast derives most of its skill from the month of July, and August predictors are relatively less important for the national outcome.
The USDA estimates of U.S. soybean yield and production were revised upward in the August 10 crop production report, contrary to market expectations of a modest downward revision. The figure below shows the differences between the latest CropProphet yield forecasts and the USDA state-level estimates; CropProphet expects lower yield in most of the major growing states, with the most significant difference being found in Illinois. Remarkably, the USDA expects that Illinois soybean yield will be only 1 bushel per acre less than last year’s record despite the USDA’s crop condition data indicating near-normal crop condition in contrast to last year’s very positive survey data. According to CropProphet, both the crop survey data and the weather and satellite predictors are consistent with much lower yields near 52-54 bushels per acre, and CropProphet shows a high probability that the USDA is too optimistic (see figure below).
The next update to the soybeans commentary will occur on August 29.
