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USDA Increases Soybean Yields, Production Forecast
Iowa Ag Connection - 09/13/2017

Despite two hurricanes in the South and weather problems throughout much of the growing season in the Midwest, the U.S. Department of Agriculture (USDA) increased soybean yield and production estimates today -- much to the surprise of farmers and industry analysts.

Soybean production nationwide is forecast at a record 4.43 billion bushels, up more than 1 percent from the August Crop Production Report and 3 percent higher than last year. Average yields are estimated at 49.9 bushels per acre, .5 bushels higher than last month.

"I'm surprised yield and production estimates increased as much as they did with the widespread drought in the major soybean-growing states like Iowa and the Dakotas," said Bill Shipley, Iowa Soybean Association (ISA) president who farms near Nodaway. "That fact is, harvest is 10 days to two weeks out. That's when estimates may or may not become reality."

According to the report, Iowa farmers are expected to harvest 567.2 million bushels of soybeans, nearly 10 million bushels more than last month. Yield estimates were raised to 57 bushels per acre, a 1-bushel boost from August projections.

The trade predicted average soybean yields nationwide at 48.7 bushels per acre. Of 32 commodity firms providing yield forecasts, only eight thought yields would be higher than the August forecast and one exceeded the USDA's September estimate.

Scott Stabbe, grain department manager and merchandiser at Key Cooperative based in Roland, said trade expectations may not reflect what shows up on yield monitors.

"The biggest surprise was just how far off the average trade guesses were, and that's really what's making the market move now," Stabbe said. "We will probably trade this for a day or two and then go back to what the Chicago Board of Trade wants to do. Whether we have a huge rally in the future depends on funds coming in or if crop numbers are substantially different."

November soybeans closed just over $9.50 per bushel Tuesday, down more than 9 cents from the opening bell.

The USDA's World Agricultural Supply and Demand Estimates Report pegs ending soybean stocks at 475 million bushels, unchanged from the previous month. With a record soybean crop and ample supplies, Elaine Kub said prices may not improve much, if any, during the marketing year.

Kub, author of Mastering the Grain Markets, said farmers may not agree with USDA projections, but the numbers influence the market. Farmers need to watch for basis opportunities and rallies when they occur, she added.

"Listen to the message," Kub advised. "Farmers have to be proactive in marketing."

Exports could be a market mover. The USDA again increased projections by 25 million bushels in 2017/18 marketing year to 2.25 billion bushels. China's insatiable appetite for soybeans is the primary reason.

China went from a soybean exporter about 20 years ago to the largest buyer during the last decade, consuming more than 1.1 billion bushels from the United States. this year. ISA leaders will travel to China this month to meet with government officials and buyers to strengthen trade relations. They will also attend a 35th anniversary celebration of the U.S. soybean industry's first office and market presence in the country.

"It will be up to demand to chew through these burdensome supplies for prices to improve," said Grant Kimberley, ISA market development director. "If not, farmers will face another year of losses."

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