After USDA’s Surprising September Yield Cuts, History Hints at More Yield Changes in October
USFR-RT1 University of Nebraska 9/16/22
Soybean prices got a bullish surprise from USDA’s September crop production report earlier this week when USDA lowered both its soybean and corn yield forecasts. One commodity trader says USDA’s yield move in September also indicates more yield adjustments could occur in the October report.
USDA’s report this week made the following changes:
- U.S. soybean yield pegged at 50.5 bu. per acre, down from the August forecast of 51.9 bushels per acre.
- Soybean production dropped to 4.435 billion bushels
- U.S. corn yield cut to 172.5 bu. per acre, 2.9 bu. per acre below August
- Corn production dropped to 13.944 billion bushels
Earlier private yield estimates had already indicated a possible drop in the national yield, so why did the changes catch the market off guard? Doug Simon of Tredas says it was the velocity of the cuts.
“I don't think people thought USDA maybe would drop it that much this fast,” he said on U.S. Farm Report. “They have a tendency to be pretty conservative on those adjustments, but I think when they went out, they basically looked at ear counts and pod counts. Now, they'll do weights on those estimates next month.”
Simon doesn’t think USDA is finished adjusting yields. In Nebraska, early dryland yields in areas of eastern Nebraska show the impact drought and heat had on the crop this year. And Simon says history also suggests USDA could make further cuts in next month’s report.
“There's a tendency for them drop again in October,” he says. “So, whether they drop the drop 6.5 bushels per acre on the corn and 1 on the beans, or I don't think they'll drop that much again, but they could drop another two on the corn and maybe another half on the beans, which would be pretty substantial cuts, especially as tight as the carry outs are now.”
