Corn, soybean yield expectations remain high
Soybean planting also started slowly this year, but a larger than average portion of the crop was planted before the end of May. For the week ended June 8, 74% of the crop in the 18 major soybean producing states was rated in either good or excellent condition.
Soybean condition ratings were reported for the 23rd week of the year in 17 of the 28 years from 1986 through 2013. On average, only 62% of the crop was rated in good or excellent condition for that week. The previous record high rating was 73% in 2010.
Soybean crop condition ratings tend to decline even more than for corn as the growing season progresses and early season ratings are not always a good indicator of the final U.S. average yield. Recent and upcoming heavy rainfall in some areas will likely begin to be reflected in deteriorating ratings, but yield expectations remain high.
The critical part of the growing season for corn and soybeans is still to come. The record yields of 2004 and 2009 were the result of ample summer rainfall and cooler-than-average summer temperatures. A repeat of those conditions this year could result in an average corn yield above the record yield projected by USDA. The 2009 average yield, for example, was four bushels above the 2004 average. A similar jump from 2009 to 2014 would result in an average of 168.7 bushels. Based on the current projection of harvested acreage, such a yield would produce a crop 286 million bushels larger than currently projected by USDA.
For soybeans, the 2009 record yield was 0.9 bushels above the previous record of 2005. A similar jump from 2009 to 2014 would result in an average yield of 44.9 bushels, which is actually 0.3 bushels lower than the current USDA projection. Based on the current projection of harvested acreage, such a yield would produce a crop about 24 million bushels less than forecast by USDA.
While it is too early to be confident of U.S. corn and soybean yield potential, the markets are clearly anticipating very large crops, particularly for corn. Prices will likely remain under pressure as long as conditions continue to point to average yields above trend value.
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