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Farm Futures survey points to optimistic soybean yields

Jen Koukol soybeans-sunset-jen-koukol.jpg
Growers report more hesitant corn yield estimates ahead of next Friday’s USDA reports.

A delayed start to the growing season, drought in the Western Corn Belt, and rampant market volatility – the list of compounding factors farmers are managing this year is equal parts lengthy and profound. That is the backdrop markets and farmers alike are dealing with ahead of next week’s first look at 2022 corn and soybean yield estimates from USDA-NASS’s latest farmer survey.

Farm Futures also surveyed its farmer readers in advance of the report. In an online survey conducted from July 13 – Aug. 1, 692 farmer respondents provided insights about their 2022 yields. And despite current market worries about soybean health, growers suggested more optimism is afoot for soybean yields than corn.

The survey found that growers expect 2022 soybean yields to notch a new record high of 52.5 bushels per acre. The estimate is surprisingly optimistic considering current crop conditions and the impending hot and dry weather expected during the middle of the month as the crop approaches peak pod fill stages.

If realized – and if USDA keeps its current 2022 soybean harvested acreage unchanged at 87.5 million acres – 2022 soybean production will rise to 4.59 billion bushels, up nearly 90 million bushels from USDA’s current estimate.

It will set a new record high for U.S. soybean production and will loosen 2022/23 ending supplies to 320 million bushels if USDA leaves its current usage estimates unchanged. That translates to an ending stocks-to-use ratio of 7.1%, which is a 2% increase from current supply estimates.

While that may not seem like a significant supply increase at first glance, a 52.5 bpa soybean yield would ease 2022/23 U.S. soybean ending stocks from the current ranking of 11th tightest on record to the 20th tightest of all time. It would be the largest domestic soybean stockpile since the 2019/20 marketing year, if realized.

If USDA does indeed trend high on its 2022 soybean yield estimate, farmers should brace for bearish price reactions. U.S. soybean supplies have hovered at historically tight volumes for the past two years. During that same time, global stocks have also been unusually tight yet global demand has soared to new heights, which has contributed to high soybean prices since August 2020.

But a large 2022/23 U.S. soybean crop could upend that price run. Top global producer and export Brazil suffered severe crop losses due to drought following its harvest earlier this spring. But 2022/23 production prospects are once again high and if weather permits improving yields this year, U.S. farmers should begin to prepare now for potentially lower soybean price dynamics.

Bearish corn yields could feed the price bulls

Farmer responses from the Farm Futures survey indicated that growers are currently forecasting national corn yields at 174.8 bpa for the 2022 season. If realized, that will represent a 2.2-bpa drop from 2021’s record-setting yield of 177.0 bpa. It would be the fourth-largest yield on record.

If USDA keeps 2022 harvested corn acreage steady at 81.9 million acres in the August WASDE report, 2022 corn production will likely fall 183 million bushels to 14.32 billion bushels. That equates to the fifth largest corn crop on record.

If USDA does not change its current usage estimates, that means that the stocks-to-use ratio for the 2022/23 will fall to 8.8% from its current level of 10.1%. The smaller corn crop will result in the seventh tightest corn supply on record. That could have bullish implications for corn prices following USDA’s report release next Friday.

Preparing for next Friday

Statistically, growers are more likely to report conservative yield estimates for the August reports, so while Farm Futures’ surveyed corn yield was not out of line with historical trends, the soybean yield suggested there could be more variability in the August USDA yields than what had previously been predicted.

Since 2000, the August USDA corn yield has eventually been revised higher 12 out of the last 22 years, or 55% of the time. There can be a little more certainty with soybean projections. In the past 22 years, USDA has only revised final soybean yields higher 8 times (36%) following the August yield report.

Plus, corn revisions tend to be larger than those of soybeans, which is due in part to corn’s innately higher yields than soybeans. Since 2000, August to January corn yield revisions have averaged 4.5 bpa while soybean changes only average 2.0 bpa.

That means there is slightly more certainty with USDA’s soybean projections than its corn counterparts. So, growers may opt to execute more conservative marketing decisions until 2022 yields are released in January 2023, particularly if they think the August 2022 soybean yield will be revised lower at that time.

But there could be a chance for bullish soybean price activity if if USDA ends up cutting 2022 soybean yield forecasts in January 2023. This year, with the late planted crops, will be more uncertainty surrounding both August corn and soybean yield estimates. However, with the majority of the soybean crop still filing pods over the next couple weeks, soybean yields are likely to be the most susceptible to revisions down the road.

There are also significant geographic considerations to 2022 yield calculations. Many farmers across the Eastern Corn Belt who also participated in Farm Futures’ Feedback from the Field series have reported excellent crop conditions through early August. But further west on the Plains, conditions are increasingly suffering amid drought conditions, which could add yield variability from states like Nebraska, Kansas, and South Dakota.

Markets will gain a better understanding of the 2022/23 supply forecasts after USDA releases its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) report next Friday, Aug. 12 at 11am CDT. Stay tuned to the Farm Futures website and social platforms as our team covers the report’s release and provides real-time market analysis.

 

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