From The Editor
June 29, 2012
Hello Pro Farmer Members!
It's not very often the June Acreage Report from USDA can add 2.315 million acres to expected soybean harvested acres and the market can close higher. Planted soybean acres were about 500,000 above the average pre-report trade estimate, so the harvested acreage number blew-away trade expectations, as well.
Nonetheless, soybean futures charged higher again today. Without stress-relieving rains in the near-term, the contract high in November soybeans set earlier this week will likely get pushed aside next week.
The counter to the bigger-than-expected increase in soybean acres is a declining yield estimate. In this week's Pro Farmer, we stayed conservative with our national average soybean yield assumption and put it at 43 bu. per acre. That's down 0.9 bu. from USDA's projection in the June S&D Report, but it's above many crop-watchers' yield peg. One of those lower estimates is reportedly coming from Informa Economics. Source familiar with the firm's work told us this morning that Informa will put the national average soybean yield at 42.7 bu. per acre, down 1.8 bu. from its earlier expectations.
Even with the increase in USDA's harvested soybean acreage peg, downside pressure on the national average soybean yield will partially offset the impact on the crop. The acreage increase combined with a lower yield should limit the increase in crop size to less than 50 million bu. in the July 11 S&D Report.
That is if USDA decides to adjust its soybean yield projection of 43.9 bu. per acre. Obviously, we think they should. But honestly, I don't know if they will for the July 11 S&D report. That's because corn and soybean yields in the July 11 S&D Report will still be projections. USDA's first survey-based estimate of corn and soybean yields will be the highlight of the August 10 Crop Production Report and that estimate (from NASS) will be included in the World Board's S&D Report released that same day.
A Reuters' poll of traders this week generated an national average corn yield guess of 157 bu. per acre. We're also told Informa is looking for a national average corn yield of 154.9 bu. per acre. Our yield assumption right now is in the middle of that at 156 bu. per acre. And did you notice that while USDA's planted corn acreage estimate is up about 540,000 acres from March intentions its harvested acreage estimate is now about 250,000 acres below the harvested acreage projection in the June S&D Report.
If our yield assumption is close to right, the combination of a lower yield and lower harvested acres would generate a crop estimate of about 13.86 billion bu. -- about 930 million bu. below USDA's crop projection in the June S&D Report.
So while this week's trade was exciting, this market may just be warming up for wilder price action in the weeks ahead.
That's it for now...
... have a great weekend!
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