Fundamentally Speaking
Joel Karlin DTN Contributing Analyst

Thursday 10/04/12

Change in Sep Soybean Conditions vs. Change in Sep-Oct Yield

As U.S. soybean harvest makes its way into Iowa and Minnesota, yield reports continue to come in well above expectations.

Hence, the key question is not whether the USDA will lift its 2012 soybean yield projection, now at 35.3 bushels per acre (bpa) in the September crop production report vs. 36.1 bpa in August, but by how much.

The accompanying graphic may provide some clues, as this is a scatterplot of the percent change in U.S. soybean crop conditions during September vs. the percent change in the USDA soybean yield from the September to the October crop production report.

Soybean crop conditions were tabulated using the USDA weekly crop progress data and used our usual system where we weight the crop based on the percent in each category and assign that category a factor of 2 for VP, 4 for P, 6 for F, 8 for G, and 10 for EX and then sum the results.

The percent soybean yield changes from September to October explain about 54% of the yield variability.

The regression formula indicates that the 4.6% improvement in soybean crop conditions during September should result in a 5.8% improvement in yield. Using the 35.3 boa yield in September would equate to a 37.3 bpa yield, which is what the market appear s to be trading a week before the October report.

Interestingly, in 1988, a year when the U.S. soybean crop was also afflicted with serious drought, crop conditions improved by 4.7%, which next to 1994 is the largest September improvement in crop conditions since 1986 with September 2012 being third best.

We should mention that in 1998 the drought stressed the crop toward maturity so the last condition report that year was issued September 18, not continuing into late September, early October like all other years.

For 1988, we measured the change in conditions from August 21 to September 18.

(KA)

Posted at 9:02AM CDT 10/04/12
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