It appears the debate heading into USDA’s highly anticipated crop production report Aug. 12 isn’t a matter of “if” USDA will raise its yield estimates.
It’s more a matter of “how much” the Ag Department will boost its projections after timely rains replenished crops and soils in key areas of the Corn Belt in recent weeks.
“Obviously, almost everybody going into these numbers expects yields will go higher,” said Bryce Stremming, MID-CO Commodities crop risk consultant.
USDA projected national yields of 178.5 bushels per acre for corn and 49.8 bushels for soybeans in July. But many traders look for those estimates to jump into the 180s for corn and above 50 bushels for beans this week.
“The prospect of an above-trend soybean yield in 2020 appears high and creates headwinds for soybean prices,” said Todd Hubbs, University of Illinois ag economist. “An August yield above current trend projections seems likely and only the magnitude remains in question.”
Hubbs estimates a national soybean yield around 51 bushels per acre. Meanwhile, StoneX pegged its yield estimates at 182.4 bushels per acre for corn and 54.2 bushels for beans as of the first week of August.
The great expectations are based on improved crop condition ratings. Nationwide, 73% of soybeans and 72% of corn ranked good to excellent as of Aug. 3. In Illinois, 76% of corn and soybeans rated good to excellent as of the same date.
And crop development was slightly ahead of pace nationwide with 92% of corn silking Aug. 3 versus the average pace of 87%. In Illinois, 96% of corn was silking (4 points above average) as of Aug. 3, with 43% of the crop in the dough stage. Soybean blooming reached 78% in the state as of the same date while 52% of the crop was setting pods, both slightly behind the average pace.
“Cooler and wetter weather across large areas of the Corn Belt holds the potential for ratings improving even more as we move into the critical period for soybeans in early August,” Hubbs said.
About 16% of the crop was under drought conditions in parts of Iowa, Nebraska, Michigan and Ohio, but not enough to lower yield expectations. If realized, demand becomes even more critical as some farmers could have more bushels to sell this fall.
“About three weeks ago, it felt like the market was trying to segue back to a demand storyline,” Stremming said. “But the last two weeks it’s been more of a production storyline, with production versus exports. I think July had record corn and bean sales out of the U.S.”
However, while soybean exports remain on pace to hit the current marketing year estimate of 1.65 billion bushels, the prospect of reaching 2.05 billion bushels in 2020-21 rests on Chinese buying in the fall, Hubbs noted. USDA projects a 488-million-bushel increase in soybean consumption for 2020-21.
“Based on improving crop conditions, soybean prices need every bushel of consumption projected,” the economist added.