The U.S. soybean crop appears to be off to its worst start of the growing season in 27 years. According to the U.S. Department of Agriculture (USDA), as of June 23, the U.S. crop rated 7% excellent, 47% good, 36% fair, 8% poor, and 2% very poor. The widely followed total of good plus excellent summed to 54% and is the lowest combined reading since 51% in 1992. The long-term median for the first report is 65% good to excellent. However, it has been a rarity of late for the soybean rating to start the summer season at 65% or lower. The first rating of the past five years has each been above 65%, ranging from 66% in 2017 to a high of 75% last year. In the preceding five years (2009-2013), 2013 was 64% and the lowest of the past 10 years. The other four years ranged from 65% to 75%.
The condition estimates are supposed to be based on soybeans that have emerged from the soil, not what is below the surface or still seed in the bag waiting to be planted. Issues that can result in below average condition ratings are generally the observable factors of below normal stand counts, drown outs, and poor coloring from stress, presumably moisture stress in 2019 as opposed to drought stress.
The natural question would then be, can any conclusions be drawn from the initial condition rating and final yield? As the scatter diagram shows, the correlation between the initial condition rating and final yield is statistically weak; but in our opinion, with some interesting larger picture observations that can be drawn.
For those unfamiliar with the methodology used for normalizing the yearly soybean yield data used to construct the chart above, this is one of the accepted methods. For each year of the historical yield series, that year’s soybean yield is calculated as a percentage of the previous record soybean yield. The 2018 yield of 3.47 tonnes per hectare was 99.4% of the 2016 record of 3.49 tonnes. Its initial condition was 75% and it is plotted at those coordinates (75, 99.4). The 2017 yield of 3.31 tonnes per hectare was 94.8% of the previous record and was plotted at coordinate (66, 94.8), 66 having been the initial condition rating. And so-on back in time for each year versus the previous record and plotted to the initial condition.
While the statistical correlation is low, there is a pretty clear distinction on yield performances in general between those years with an initial rating over 60% good to excellent and those years at 60% or below. The 2019 condition rating is indicated by the red, dashed line at 54%. If we follow a strict interpretation of the scatter and follow that line to the linear trend, the reading would suggest this year’s crop could yield somewhere near 92% of the 2016 record yield. In addition to this line is an oval circling the years that experienced some degree of planting delays from wet weather that were similar to what U.S. farmers have faced in the current seeding campaign. The two years with even lower condition ratings and outside the oval were both years with early plantings due to drought conditions – 1988 and 1992 – and neither of those two years would seem to be relevant to judging 2019 prospects.
All is not doom and gloom for the 2019 U.S. soybean crop at this early stage in development but the point to be made is that this year’s slow planting pace has resulted in below-normal initial crop ratings. By extension, these ratings point to a somewhat lower ceiling for the yield-potential of the 2019 U.S. soybean crop, but record carry-in supplies are expected to help keep domestic supplies comfortable, and prevent prices from shooting considerably higher, despite what appears to be a smaller crop.
