What About Soybean Yields?
By Shelby Myers
Grain Market Intelligence Director
Last week’s Pro Farmer Crop Tour didn’t swing the market one way or the other. In fact, it seemed to fall flat. Pro Farmer projects corn yield at 172.0 bushels per acre and soybean yield of 49.7 bushels per acre. Remember from last week, our expected corn “bull-threshold” is 165.0 bushels per acre, and 172.0 bushels per acre would be much higher than that. If 172.0 bushels per acre holds, it keeps the corn balance sheet heavy on the supply side, adding more ending stocks. But what about soybean yields?
As noted in our Summer Grain Webinar, the soybean balance sheet is very tight. The dramatic cut from 87.5 million intended soybean acres to 83.5 million acres actually planted shook up the supply side. Balance sheets are also tightening further because demand line-items for US soybeans are thriving. We’ll almost certainly see record crush for the 2022/23 marketing year as it closes out this week. Plus, soybean exports are not feeling depressed like US corn exports. USDA’s June Acreage report turned the soybean balance sheet from neutral to bullish. Now, August weather has been hot, with little precipitation. That’s not exactly ideal for the finishing stages for soybeans. If this dry spell leads to smaller yields, then what?
The current USDA soybean demand situation assumes crushing at 2.30 billion bushels, which is up from a record 2.22 billion this year. USDA estimates soybean exports at 1.825 billion bushels. That would be the lowest quantity of soybeans exported since 2019. Seed and residual use are expected to reach 126 million bushels, resulting in total US soybean demand for the 2023/24 marketing year at 4.25 billion bushels, also the lowest since 2019. Current ending stocks sit at 245 million bushels, with a stocks-to-use ratio of 5.8%. USDA estimates the average farm price for the marketing year at $12.70 per bushel. In past years, a stocks-to-use ratio at that level put soybean prices closer to $10-$11 per bushel.
USDA currently projects the supply side to produce 4.2 billion bushels of soybeans. That would mean a yield of 50.9 bushels per acre across 82.7 million harvested acres (against 83.5 million acres planted). The rate of harvested acres to planted acres is 99%, which is close to the historical 15-year average rate of 98.8%.
Assuming all demand remains the same, we think the soybean balance sheet gets even tighter – and maybe even upside down – if yields fall below 49 bushels per acre. At that yield, production falls to 4.0 billion bushels, pushing ending stocks down to 128 million bushels. The stocks-to-use ratio falls to 3.0%, which is nearly half of what it is today. Ending stocks at this level would put 2023 closer to years like 2012 and 2013, when the marketing year average prices were $14.40 and $13.00 per bushel, respectively.
A yield higher than 49.0 bushels per acre keeps the bullish sentiment on the soybean outlook without adding imports. If yield were to fall lower than 49.0 bushels per acre, balance sheet adjustments that increase demand become more difficult, especially given soybean export sales announcements to China thus far and added soybean crush capacity. Something we are keeping an eye on: At what point does the US become a soybean producer and a soybean importer the way Argentina operates? In that scenario, the US fulfills global seasonal demand for US soybeans while also satisfying the domestic demand for soybean crush. That’s the only way we see the US balance sheet staying balanced.
For now, keep an eye on weather irregularities that could lower yields and get in contact with our grain marketing advisors. If we do have to import soybeans into the US, likely in the first quarter of 2024, the soybean price will lower with the increased supply and significantly alter the overall picture of the US soybean market.