Fundamentally Speaking

Joel Karlin
DTN Contributing Analyst

It is difficult to believe that 2013 U.S. soybean yields could be lower than seen in 2012 given the devastating drought a year ago.

That is what may happen if the very dry August conditions continue into September with the trade already contemplating a yield at 40 bushels per acre or below.

That is not that far above the final 2012 yield of 39.6 bpa that may could be adjusted higher next month.

The accompanying graph is a scatterplot of how soybean yields in individual states deviate from the 25-year trend when August rainfall in those states is 50% or less of average levels.

We looked at a number of Midwest states from 1970 to 2012 and found 23 instances of August rainfall less than half of normal and all but three had below trend soybean yields.

Of these three incidents, Iowa in 1971 had only 31% of their normal August rainfall yet soybean yields that year were 1.3% above trend.

That year Iowa had a very cool summer with average July-August readings at 70.4 degrees, well below the normal 72.7.

Nebraska in 1973 had only 48.2% of their normal August rains yet final soybean yields that year ended up 11.9% above trend.

The mitigating factor that year was normal July rains as the summer temperatures in Nebraska that year were slightly above average.

Finally, in 2010 Indiana only had 49.2% of their normal August rains yet soybean yields were 1.4% above trend.

Indiana temperatures that year were actually quite a bit warmer than normal but rains were normal in July and double the usual average in June.

The point here is that many areas of the Midwest will end August with less than half their normal rains for the month and this is not good for yields.

Keep in mind that cooler than normal readings for much of the month may offset this to some degree while those areas that had good July moisture (primarily east of the Mississippi) may also be insulated to some extent.

(KA)

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