USDA’s Soybean Yield Estimate a Miss?
While USDA continues to dream about record-large yields in the U.S. this year, crop conditions and yield models for corn and soybeans continue to decline for the third week in a row.
Once again, it appears that USDA will have to cut yields into the final January report – after hiking them too aggressively again this summer and early fall. It actually did it again in soybeans in October, hiking the yield estimate even though we already had seen a couple weeks of declines in yield potential (and now a third week of decline this week).
At least it got the corn yield direction right – with a small cut in the October monthly report. But more may be necessary – depending on remaining harvest weather (which was awful so far in October).
Weather forecasts remain similar to the past few days with the potential for an improvement in harvest weather due to drier conditions. We have a mostly cold and relatively dry period forecast for the Corn Belt in the coming two weeks. More specifically, the next seven days are forecast above-normal precip in the southernmost states (from Texas east), while virtually the entire Corn Belt will see below-normal precip. The normal to below-normal precip continues in the eight- to 14-day forecast. Temps are below normal for most of the Corn Belt, except in the far northwestern corner of the Corn Belt (including the Dakotas, Nebraska, and points west) for most of the 14-day forecast. Overall, we’ll need much better weather to allow the harvest of the crop, as soybean harvest particularly has fallen well behind normal.
Crop progress numbers support the idea that harvest conditions were horrible last week, with soybean harvest falling well behind normal at only 38% done (15% behind normal), after a relatively early season so far this year. Only 6% of soybeans were harvested last week, a pathetic harvest week for the middle of October due to rain, cloudy days, hurricanes, and even over 1 foot of snow in North Dakota. Corn harvest is 39% complete, 4% ahead of normal so crops that stand well above the ground and can be dried more easily are still moving along (although only 5% of corn got harvested last week, too). Corn conditions were unchanged at 68% G/E, but soybeans dropped a large 2% (for this time of year) to only be 66% rated G/E. Those who experienced 6 to 12 inches of snow on top of their soybeans or a hurricane are having a hard time visualizing a record-shattering crop in 2018!
Pro Ag soybean yield models dropped another significant 0.38 bushel per acre this week to just over 49 bushels, and are down now about 1 bushel per acre in the past three weeks from the peak yield of near 50 bushels. Pro Ag estimated corn yields were also down slightly this week, and have dropped about 3 bushels per acre in the past three weeks, as well. USDA seemed relatively blind to the harvest problems in soybeans last week when it hiked yields even more to record-high levels at 53.1 bushels (about 2% higher than previous record yields in spite of 8% lower G/E ratings than 2016).
There almost seems a blatant disregard for any recognition of crop problems by USDA thus far, as it is now 4 bushels per acre above the Pro Ag yield model – nearly 10% high! But as usual, that might not matter, as the market is starting to recognize the harvest problems, as indicated by the 24¢ gain yesterday in soybeans. USDA is going to have mud on its face, again, in soybean yield predictions, having to drop significantly the yield into the final January yield estimate (and sometimes even a year or two after) – just like it did in 2017.
Whatever aggressive system they switched to a few years ago to quickly move to where the market is thinking yields are at the time (July, August, September), it’s not working very well in predicting final soybean yields in January.
Cotton is 32% harvested (7% ahead of normal), and 85% bolls opening (2% ahead) but conditions dropped a huge 7% to 35% G/E as a hurricane isn’t good (nor are heavy rains) for cotton. Sorghum is faring better, with 81% mature (1% behind normal) and 42% harvested (6% behind normal). Only 3% of sorghum was harvested last week – the peak time in harvest in October! Sorghum conditions remained steady at 55% rated G/E despite the lack of progress.
Sugar beets are 42% harvested, a huge 21% behind normal as only 2% were harvested last week (the peak time of harvest). Sunflowers are only 10% harvested (5% behind normal after a pathetic week of only 4% harvested).
Winter wheat is 65% planted, 2% behind normal as only 8% was planted last week. 44% of winter wheat is emerged, 3% ahead of normal. (It still comes up when it’s raining.)
Soil moisture levels soared higher last week, up 6% in topsoil rated adequate/surplus (to a very historically high 87%), and subsoil rose 5% to 80%. Both are extremely high levels for harvesttime, and do indicate trouble ahead for harvest. This is especially concerning to Northern areas, as soft soils this time of year make it difficult to get much done each week, and time is running out before winter sets in.
We’re starting to see more friendly news in the markets, with crops hurt recently by poor harvest conditions and high harvest losses, and improving trade outlooks, as U.S. foreign affairs are getting better with almost everyone (except China). Turkey’s release of an American pastor is thawing relations with this important country, and leaves China more isolated and left out of easy access to the most important market in the world – the U.S. Corn exports to date are 75% higher than last year indicating strong, strong demand.
Soybeans, however, are lagging (as can be expected due to the Chinese slapping 25% tariffs on U.S. soybeans). The announcement of expanded 15% ethanol sales window is a good start to helping ag markets.
Ray Grabanski can be reached at firstname.lastname@example.org.
Ray Grabanski is President of Progressive Ag Marketing, Inc., the top
Ranked marketing firm in the country the past 8 years.
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