Have US corn, soy yields already marked their lows for 2023? -Braun

NAPERVILLE, Illinois, Aug 15 (Reuters) - Recent improvements in weather had market participants thinking the U.S. government’s latest corn and soybean yield outlooks were likely too conservative, a significant shift in attitude considering earlier comparisons with the 2012 drought.

The trend is somewhat mixed as to whether the survey-based August yields are ultimately too high or low, but widespread precipitation across the Corn Belt so far this month could offer clues as to where these yields are headed next month.

The Department of Agriculture on Friday pegged U.S. corn yield at 175.1 bushels per acre and soybeans at 50.9 bpa, below both the average trade guesses and last month’s model-based yields.

But last weekend, both corn and soybean crop conditions worked their way above the year-ago readings after having been down as much as 17 and 14 percentage points, respectively. That is among the biggest-ever condition comebacks, especially for soybeans.

Those conditions and the likely expectation for bigger yield estimates next month weighed heavily on Chicago corn futures on Tuesday, as the most-active contract traded to its lowest level since Dec. 31, 2020.

AUGUST LOW OR HIGH

In the last decade, August featured the season’s lowest U.S. corn and soybean yield estimates four times each, most recently in 2021 for both. That statistic considers estimates from August forward.

The frequency of August yield minimums remains consistent between both crops if extending back 20 years, as the lowest yield estimates were printed in August seven times each.

August maximums have been slightly less frequent in recent years. USDA’s August corn and soy yields were the season’s highest in three of the last 10 years, most recently in 2022 for both.

Extending to 20 years puts August corn maxes at seven and soy maxes at five, meaning that the most unlikely scenario has been for USDA to print the highest bean yield of the season in August.

Looking toward final yields, the August corn yield has a slight tendency to be too high. Final corn yield was lower than in August in six of the last 10 years and in 10 of the last 15 years. The last two times final corn yield was above the August figure were in 2021 and 2017.

The trend in final bean yield versus August is evenly split in the last decade, though the August number has been too high versus the final in five of the last six years, the only outlier being 2021.

It is unclear whether these August yield statistics have been impacted by USDA’s elimination of August corn and soy field visits in 2019. However, this has not had an apparent impact on analysts’ ability to anticipate the August forecasts.

USDA’s July corn yield print has been too high versus the final for three consecutive years now, possibly suggesting trend-line yield has drifted too high. July bean yield was higher than the final most recently in 2022, 2019 and 2013.

USDA’s July corn and soy yields were 177.5 and 52 bpa, respectively, and both would be new records.

AUGUST RAINS

Although the relationship is far from perfect, August rainfall is the most telling variable when it comes to what corn and soybean yields might look like in the September report.

For the most part, when August rainfall across the Midwest is above average, USDA’s September corn and soybean yields usually come in higher than in August, and vice versa. That could suggest higher yield estimates next month, though there are some outliers, including last year for both crops.

That 2022 outcome may owe to abnormal August dryness in the Plains, including Nebraska and Kansas, so a Midwestern rainfall variable was unable to capture the full picture. Rains in those areas have been much better so far this month.

The direction of corn and soybean yields from August to September has a very weak relationship with temperatures, the July-August yield directions and crop conditions, including recent changes in conditions.

However, it is worth noting that soybean conditions in the latest week jumped an ultra-rare 5 percentage points, the week’s biggest increase since 1991.

2021?

There are a couple possible connections between 2023 and 2021, particularly interesting given the too-light yield estimates in August 2021.

Widespread but stable drought coverage was also a theme at this point in 2021, especially in Iowa, proving that a large national yield is achievable under drought conditions given timely rains and moderate temperatures.

In the last nine years, the trade overestimated August soybean yield only twice: 2023 and 2021. Those were also the only two years of the last nine where August bean yield was lower than in July. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Writing by Karen Braun Editing by Matthew Lewis)