WASDE Preview: A Yield Bump Could Still Be A Friendly Report

Production Outlook
Only six of the past 20 years has USDA increased soybean yields in the August WASDE report, reports Brian Splitt, Allendale. ( Farm Journal )

Weather pressures and early maturing of the 2018 crop have many in the trade looking for clues as to how the markets will react to Friday’s USDA report.

“The August report is interesting because it is still just a guess—it's a stepping stone,” Steve Georgy, Allendale. “We're not in the fields doing field checks yet, still a little bit early.”

Eleven out of the last 20 years, they've been 4 bu. off either way, Georgy says. “So still, it’s variable.”

Allendale is using a 177-bu. average yield guess, adds Brian Splitt, which is only 0.4 bu. ahead of the record 176.6 bu. per acre.

“We could still see a new record yield and have that be, to me, price supportive because we still have carry out levels that are below 2 million bushels,” Splitt says. “I think the markets are still going to want to go higher, if we get a number like that.”

Weekly export sales have been very strong and, specifically for corn, driven by global demand, Georgy says. That’s likely to continue.

Multiple Factors Hitting Soybean Markets

Soybeans, on the other hand, are still needing moisture to fill out the pods.

“Interestingly, only six of the past 20 years they've increased yields on this report for soybeans,” Splitt says. Statistically, this is likely to be a friendly report for the trade.

“So when you look at the type of yield change, we would see it's to the average of 2.4%. If they do increase yield, that would still be below 50 bu. per acre,” he adds.

Current trade impacts from China are likely to play a role in the market as well.

“Market attitudes are really what’s going to carry this [market] because we have such big ending stocks currently,” Georgy says. “We need to remain focused on that. This report, as I said before, it's only a stepping stone, continue watching headlines.”