Fundamentally Speaking

We noted the 19-cent gain in November soybeans on Monday, August 19, the second largest daily advance since May 2, as both the news and price action has been distinctly bearish since then.

The pop in values could be linked to the latest forecasts calling for above normal temperatures and very little rain for key soybean producing areas the last third of the month and that could take the top end off yields.

The question is lopping yields from whereas continued high crop ratings suggest USDA's already record 53.2 bushel per acre (bpa) projection given last week may not be the peak forecast.

Similar to what we did with corn last week, this chart shows the week 28, or around the middle of July soybean crop ratings, and the week 33 ratings, or around the middle of August, and the ones released this week.

These are plotted on the left-hand axis using our usual ratings system weighting the crop based on the percent in each category and assign that category a factor of 2 for very poor, 4 for poor, 6 for fair, 8 for good, and 10 for excellent and then sum the results.

Reported on the right-hand axis is the change in the USDA U.S. soybean yield estimate from the August to September report in bpa.

The figures in the yellow boxes above the week 28 rating is the percent final U.S. soybean yield deviated from 2000-2024 trend.

A couple of observations include the fact that the current week 33 rating of 744 is actually the fifth highest since 2000 and all the years of higher ratings such as 2020, 2016, 2014 and 2004 had final yields significantly above trend averaging 5.0% above trend.

Even 2009, with a slightly lower week 33 rating of 740 than this year, saw final yields 2.3% above trend.

USDA's current 2024 yield of 53.2 bpa is just 1.0% above this year's trend of 52.5 bpa, so a final yield this year at 53.7-54.2 bpa, if not higher, is certainly reasonable.

Also, this year's soybean ratings have actually improved over the past five weeks, albeit slightly, bucking the usual seasonal downtrend as crop ratings average a 10 point decline between weeks 28 and 35, suggesting good conditions have continued though soybeans critical developmental month.

As for August to September yield changes, of those five years mentioned, two actually saw a yield decline with the others showing a rise in yields from the August to September report.

Since 2000, U.S. soybean yields average a 0.1 bpa drop between those two reports.

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