When we last wrote about the soybean market in late August, the 2013-14 U.S. crop – now in harvest – was stressed, and output estimates were tumbling. In its September crop report, the USDA lowered the yield estimate to 41.2 bushels per acre, down from the 42.6-bpa August estimate. That shaved more than 100 billion bushels from the production estimate, to 3.15 billion bushels (85.7 million tonnes).
The USDA revision to the yield estimate came as no great shock – the figure was right in line with the average of analysts’ guesstimates of 41.172 bpa. The market rallied 40¢ per bushel regardless and maintained the rally through the following session. That proved to be the high of the range, though, as timely rains arrived to alleviate pressure on the crop. Prices have since fallen by more than $1 per bushel.
The most recent weekly crop progress report showed that the good-to-excellent portion of the crop jumped by three percentage points from the previous reading. During the U.S. government shutdown, this and other data will not be collected, so we’ll be driving in the dark for a while. Private forecasters have been revising their crop estimates cautiously higher. The October crop report should show an increase from the September estimate, but the crop will still be significantly smaller than early-season forecasts indicated.
After the September crop report, the next important report was the Sept. 30 quarterly stocks update. Analysts were off the mark with this one. This report reflects the final quarter of the marketing year, so the guesstimates were based largely on the September crop report’s 2012-13 ending-stock estimate, which was 125 million tonnes. The average guesstimate was 124 million tonnes, but the figure came in at 140 million tonnes. The market greeted the report with a 40¢-per-bushel selloff.