By Adam Graves, Global Risk Management Inc.

There has been ongoing debate around corn and soybean yields essentially all growing season. Inconsistent weather, or at very least weather favorability being inconsistent across different parts of the United States, as well as weekly USDA crop updates that saw conditions falling throughout the summer had dampened optimism for both crops. Despite all of this, it does appear as though the lows for the yield estimates could have been the figures presented by the USDA in August, as they revised both yield figures higher in their September WASDE report. The revised yields for corn and beans sit now sit at 176.3 bu/ac and 50.6 bu/ac respectively. With balance sheets having seen some relief but still looking tight in the context of recent history, the question remains – where will yields go from here?

By no means is it uncommon for the USDA to increase their yield projections between August and September. Looking back to 1965 (last 56 years), corn yields have been projected higher in September versus August in exactly half of all instances, while bean yields have seen the same happen in 54% of those years. For both corn and beans, this is a fairly significant signal that final yields could come in even higher than the September figure. In the 28 years since 1965 where the corn yield projection was seen rising from August to September, it has subsequently risen from September to final in 20 years – 71% of the time. When looking at recent history this signal is a little bit less convincing in corn. Since 2010, corn yields have only been revised higher in September four times and have only been amended higher into the final figure in two of those four years. For soybeans, the higher September yield figure is still meaningful as it relates to final yields, but less so. Of the 30 years where the USDA’s September figure was revised higher, 17 (60%) had higher final yield figures. That said, recent history has been more favorable towards higher final soybean yields. Seven years from 2010 onward have seen September yields up from August and four of those years saw higher final yields.

Weather to finish both crops this season has been non-threatening if not favorable and the weekly USDA crop conditions have essentially stabilized – will this season also see higher final yield figures for corn and/or soybeans? History would say there is a fair chance for this to occur.

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