Fundamentally Speaking

Big changes in Corn Belt growing conditions forecast with lots of opportunities for rain and much cooler temperatures.

For many fields, this transition is coming 2-3 weeks too late and the question is how much damage was done from this arid stretch of weather and the impact of the derecho destruction.

Given robust market action of late, it is hard to remember just a fortnight ago we had bearish USDA crop and WASDE reports to the extent that $3.00 December corn and $8.00 November beans seemed possible by harvest.

There is now a huge degree of uncertainty as to how much erosion has been seen in corn and soybean yields which the USDA pegged at 181.8 and 53.3 bpa respectively and both at a record, since the two weeks have elapsed.

In this chart, we employ a simple regression model using crop ratings vs. percent deviation from trend yield to graph out a scatterplot study.

Using our usual rating system where we assign the percent of the crop in excellent condition at 10, that in good at 8, fair at 6, poor at 4 and very poor at 2 and then summing the results, the week 34 rating or 4th week in August corn rating of 726 projects to a final yield 1.7% above the 20 year trend of 174.7 resulting in an estimated yield of 177.6 bpa.

This year's week 34 soybean rating of 746 projects to a final yield 3.3% above the 20-year trend of 50.3 resulting in estimated yield of 51.9 bpa.

Should note that R square for corn at 78.2% is much higher than soybeans 40.2%.

That is due to fact still a lot of room for soybean yields to improve or decline vs. corn where the yield band is much narrower given the advanced state of crop barring a freak fall freeze.

The point here is that soybeans could really benefit from the forecasted rains and there is still a chance that current USDA yield forecast could be attained or even exceeded.

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