Back in April, early forecasts for a record 2013-14 US soybean crop pushed prices down far enough for even die-hard bulls to declare lights out on the bull market. It was a given that the coming record crop would replenish low inventory levels that had resulted from strong domestic and foreign demand.
Initially, the wet spring that hampered corn planting was not viewed as problematic for soybeans, because its planting window closes much later. But as the planting season dragged on without any significant progress, traders began to worry that the crop would be planted late enough to extend the growing season into frost season.
As of the most recent crop progress report, 92% of the crop has been planted, compared with 99% last year at this time and the five-year average of 95%. Those numbers don’t tell the whole story, though. About a third of what’s been planted just made it into the ground over the past two weeks. Last year the crop had been almost completely planted several weeks previously. At this point, a disaster has been avoided, but the shorter growing season will give bears something to worry about throughout the summer.
The June crop report maintained its May estimate for the 2013-14 US crop at 3.39 billion bushels. The jump in the estimate for ending stocks, to 265 million bushels, up from a record low 125 million bushels, or 4% of consumption, can hardly be an accurate reflection of current developments and will almost certainly be revised downwards in the coming months.
The forecast for record average national yields of 44.5 bushels per acre is very courageous, given how late the crop was planted. The only time US yields were even close to that level was in 2009-10. Excluding that season, the five-year average yield was 41.28 bushels per acre. While the excessive precipitation was certainly beneficial, particularly after subsoil moisture was compromised during last year’s drought, it is a very optimistic estimate.