Fundamentally Speaking

USDA August Soybean Yield Estimates

For many regions in the Midwest, this month will go down as one of the coolest ever for July and has been huge blessing for reproducing soybeans.

Even though the last half of the month was dry, in fact quite dry in many areas, good rains the first half of the month along with heavy rains in June has kept the plants thriving.

As consequence, ratings for this year's U.S. crop are the fourth best ever for late July since the USDA crop condition report data series began back in 1986.

This graphic shows national soybean crop ratings as of July 27th vs. the percent that the USDA's August soybean yield estimate deviated from the 1986-2013 trend of USDA August soybean yield estimates.

Incorporating our usual ratings system where we weight 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, U.S. crop conditions as of July 27 calculate to 760.

This is the highest rating since 798 back in 1994 when final yields that year were 14.1% above trend.

The only other ratings for that date that were higher was 1992 with final yields 6.0% above trend and 766 in 1987 when final yields that year were 2.6% above trend.

The logarithmic trend-line provides a decent fit and explains about 71% of the variability in USDA August soybean yield estimates.

Plugging this year's 7/27/14 rating of 760 into the formula results in a prospective 2014 U.S. soybean yield of 45.3 bushels per acre (bpa), a new record exceeding the prior peak of 44.0 bpa set in 2009.

Though the USDA has projected this year's yield already at a record 45.2 bpa, the trade estimates for the upcoming August 12th crop report will most likely come in under this figure as the key month of August lies ahead.

Note that the 1986-2013 trend for the August crop estimates only put this year's projection at 43.1 bpa.

If this year's crop finishes well, expect rather sizable increases in the USDA yield estimates from the initial report in August till the final estimate is released in January next year.



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