A Little More About August WASDE Yields
By Shelby Myers
Grain Market Intelligence Director
It’s worth reiterating: Markets will have a lot to react to when the August USDA WASDE report hits the wires later this morning. We expect a lot of volatility even into the week following the report. Historically, corn volatility jumps to over 45% and soybean volatility sits around 30% during the week after the August WASDE. Since volatility levels are already higher than that this summer – especially for corn – we could see even higher levels. Analysts expect corn yield between 172.4 to 178.0 bushels per acre with the average sitting at 175.5, down two bushels per acre from July. For soybean yields, analysts expect yield between 50.5 to 52.0 bushels per acre, averaging 51.3 bushels per acre. The final hour debate – do recent rains warrant an increase to yields?
A historical perspective can help address the question. But what we must keep in mind is that starting in 2019, USDA NASS eliminated the August “objective yield survey” for corn and soybeans. That information is not available until September. So, we only have farmer observations dictating supply and price expectations. Furthermore, USDA’s chief economist changed at the beginning of 2021. That could affect policy and precedent of what and when certain data points are considered in the WASDE numbers. These two factors potentially distort the historical perspective of USDA’s past yield changes. Not to mention that the 2019 growing season is an anomaly all together.
In what was already a rare moment, USDA lowered 2023 corn yield in July, the earliest in the season since 2019. And, traditionally, farmers are more often pessimistic in their survey responses since switching to the survey-only methodology. So, generally, the likelihood of a yield decrease is a much higher probability. We at Ever.Ag Insights expect corn yield in the report to drop to 176.0 bushels per acre, which would still be near-record yield. But recent rains scattered across high corn-producing regions in July brought relief to struggling crops. And a bit of yield optimism.
For soybeans, we expect USDA to make a small yield cut in response to the pressure of lower-than-normal crop conditions. Ever.Ag Insights puts this month’s soybean yield at 51.0 bushels per acre, one bushel per acre lower than July. It is even more unusual for USDA to alter the soybean yield estimates earlier than August. Circumstances of years like 2012 and 2019 had conditions low enough to pressure yields lower earlier. Farmers tend to be more optimistic of their soybean yields as reflected in previous August WASDE reports. Recent weather patterns suggest that trend will likely continue this year, too.
Corn crop condition improved this past week to match 2022 levels for the same week. Corn rating good-to-excellent reached 57%, back within the 10-year historical range, with more corn improving from fair to good. Corn rating fair-to-good is 76%, near the same-week 10-year high.
Soybean conditions increased to 54% rating good-to-excellent this past week, also back within the 10-year range, but still near the bottom. Soybeans rated fair-to-good are right at and tracking with the five-year average. This is all on the backs of improved drought conditions with drought quantity and severity reduced. The quick summary – crop quality is making a late-season rally, pressuring yields to potentially rise late in the season.
Like many, we’ve been eagerly awaiting this WASDE report, especially with early onset drought conditions kickstarting supply speculation. Improved crop genetics are certainly going to factor into this year more than anyone ever expected. Improved moisture will also have to be considered. USDA also publishes the Crop Production report for a look at state-level supply. This provides information for local basis. The new crop marketing year is nearly here and the pieces of supply are coming together. Make sure you talk with one of our grain market advisors about your marketing plan. Also, click here to get registered for the Ever.Ag Insights Summer Grain Webinar next week for a discussion on all this and more.