Why Early Yield Reports are Shocking to Two Veteran Market Analysts
USFR-RT1 9.30.22
Soybean prices slid on Friday after USDA’s Grain Stocks report was released. It’s not just stocks that have some analysts concerned; early yield reports from the Midwest are also surprising.
USDA says as of Sunday, 12% of the U.S. corn crop had been harvest, 2 points behind the 5-year acreage. Soybean harvest sits at 8% complete, which is 5 points lower than average. While early harvest reports are continuing to roll in, Arlan Suderman of StoneX Group says yield reports are all over the board with some areas better than expected.
“We're certainly seeing those people who are getting some really good yields, and even better than expected, considerably better unexpected,” he says. “It really comes down to the rains that we received in the last 45 days, and particularly west of the Mississippi, especially in Kansas, Nebraska, South Dakota, in parts of Missouri and Iowa, where the yields are low, as kind of as expected. Other areas of the Midwest are spotty, even areas east of the Mississippi, we see some disappointing yields. But otherwise, we're seeing some really good yields.”
Suderman says while there are some drought areas in the western Corn Belt, the good areas are even producing records in certain locations, which is helping save the U.S. from a crop disaster.
“This is one of the reason to why we didn't expect a crop failure this year,” he adds. “We didn't expect a total crop failure, I was looking for something in the low 170s [bu. per acre]. And I still think that we're going to end up there, maybe just a little bit lower. My yield model right now is at 169. But it's really going to come down to how the good yields with good seed size averaged out against those areas that really got hurt. And how that all flushes out.”
Suderman says considering about 15% of the crop was harvested as of late this week, it’s a matter of how the rest of the harvest reports turn out, and if reports continue to come in better than what some expected, it’s a question of if USDA will possibly raise its yield forecast in the upcoming October crop report.
That's a great question, whether they'll raise or not,” says Darren Frye of WaterStreet Solutions. “I could see them leaving at the same here in October, just because of all the yield data that I'm collecting. And it isn't just east of the Mississippi, there's some really good spots in Iowa, Minnesota up into the Dakotas.”
Frye says on good soils, he’s haring reports of yields coming in 20 to 30 bu. per acre better than expected. However, some of the poorer ground is also producing yields that are surprising farmers.
“Some of the poor ground is what's really shocking,” he adds. “Stuff that we thought might make 181 to 190 is in the 220 to 230 bushel range with very little rain. And I do think that the USDA, you know might have to bump yields up before it's all over. But as Arlan said, we're only 15% into it, we will see harvest accelerate. And as we get more data, we'll have more of an idea.”
While overall yields may be a bearish factor on the markets, an escalating situation between Russia and Ukraine could stoke the bulls. Watch this week’s marketing discussion to hear what Suderman and Frye are watching when it comes to Ukraine.
