Fundamentally Speaking

June 22 Soybean Crop Ratings vs. Final Yields

The accompanying graphic shows as of June 22nd, the percent of the U.S. soybean crop rated either as good or excellent and the aggregate crop rating using our usual ratings system where we weight the crop based on the percent in each category and assign that category a factor of 0.2 for VP, 0.4 for P, 0.6 for F, 0.8 for G, and 1.0 for EX and then sum the results.

Both of these are shown on the left hand axis and plotted against the percent that final U.S. soybean yields deviated from the 1986-2013 trend.

Even with heavy rains in the Midwest lowering the combined good and excellent ratings by 1% this past week, the latest figure of 72% is the highest ever for this date as is the weighted condition figure of 76.0.

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Note that soybeans are planted later than corn so a couple of years, 1995 and 1996 to be exact, the first crop ratings for those seasons did not occur till June 25 and June 30 respectively.

With these stellar crop ratings, the trade is now feeling more confident that the USDA's record 2014 soybean yield projection of 45.2 bushels per acre can be attained or even exceeded.

As opposed to corn where outstanding conditions as of June 22 almost always translate into final yields above trend this is not the case for soybeans.

The years 1991, 1994, 1999, and 2003 are closest to this year's lofty ratings but only 1994 had outstanding yields at 41.4 bushels per acre, not only a new record but 14.1% above trend.

In contrast, 1991 saw final yields 2.5% below trend, 1999 4.5% below trend, and 2003 15.2% below trend.

Having great early season conditions have little correlation with final yields especially with the critical flowering and pod setting phase not occurring until August.

This may be one of the reasons that new crop soybeans have held in better than new crop corn as traders realize there is a long time till this year's soybean crop is safely in the bin.


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