What Yields to Expect in the August WASDE
By Shelby Myers
Grain Market Intelligence Director
We suspect the August WASDE will be a market mover. For the first time this season, the report will incorporate corn and soybean yield results collected and published in the Crop Production reports issued by NASS. This is the culmination of survey data collected from operators but does not include objective yield plot results from fields across the country.
Since last month’s WASDE report, good-to-excellent crop conditions have disappointed, despite rains received. Only 55% of US corn rates good-to-excellent, followed up with another 30% rated fair. However, good-to-fair corn is rating marginally above the five-year average. US soybean production has 52% of planted acres rated good-to-excellent, the lowest rating in the past decade, while 33% rates fair. And though recent rains helped relieve drought-stricken areas, particularly those rated D4 – exceptional drought intensity – 57% of US corn production remains in varying degrees of drought. Meanwhile, 50% of US soybean production remains in D1 to D3 drought, and only 1% in D4 intensity.
Across the country, crop tours are underway, with boots on the ground and attendees assessing yield potential. For this month’s USDA reports, many farmers received a call asking about yields and, likely, responded pessimistically. It might not be surprising to say – that happens most years, even when there isn’t a drought.
Indeed, August yield estimates are some of the worst indicators of final results published by USDA. Looking back all the way to 2012, the August corn yield estimate was off by as much as 6%. There are eight years when the error rate is above 1%, compared to three years when the August estimate was close to final yield, off by only a couple hundredths of a percent. Additionally, over this period, USDA August yields underestimated final yield four out of 11 years. The two years with the greatest misses were 2017, with the August yield estimate 4.0% lower than the final yield, and 2020, when the August yield was 6.1% higher than the final.
Soybean yield estimates in August fair even worse than corn, but this is expected, considering soybeans are podding by publication time. USDA’s August estimate has only been within a 1% margin of error compared to final yields once since 2012. That was 2017. Otherwise, USDA August soybean yield estimates might as well be anyone’s best guess. USDA has underestimated final yield in August six times out of the past 11 years. The biggest miss was in 2012, when the August yield was 36.1 bushels per acre, 9.7% lower than the final 40 bushels per acre. Last year, USDA overestimated yield by 4.8% in August.
For those keeping score at home, the error rates do improve through November – but not by much. Catch more of those analyses in future articles.
As we get closer to the August WASDE report date, it’s safe to say, “take this one with a grain of salt.” We expect a big market reaction to whatever the report says. But history tells us the story isn’t over. For the corn balance sheet, with stagnant-to-lower demand, supply can afford some yield reductions to remain at current prices. But recent new-crop export sales to China prove global soybean demand is strong. The cut in planted acres, combined with a lower yield, tightens an already-tight situation, pressuring prices upward. Check in with our grain market advisors to position ahead of a report bound to cause some fireworks.