CHICAGO, Oct 13 (Reuters): Expectations surrounding the US soyabean crop keep growing. Not only is a reality check in order - in terms of whether such big yields are even possible - but the impact on domestic stocks may be of greater interest.
Analysts are expecting soyabean yields to rise to 51.5 bushels per acre in the US Department of Agriculture's monthly crop production report, due on Wednesday at noon EDT.
This yield is far above the previous record of 48 bushels per acre, set last year. The 2014 crop holds second place with 47.5 bpa, and both 2009 and 2013's bpa of 44 is a distant third place.
Lately, the market cannot seem to decide whether it is bullish or bearish on soybeans with impressive demand but even more impressive supply. But the bear may be in control in Chicago, as CBOT soyabean futures are back near mid-April levels, having lost 22 per cent since their June 10 high.
For what they are worth, word-of-mouth harvest reports as well as those floating around social media seem to confirm the market's yield position comfortably over 50 bushels per acre. Interestingly, no industry estimate topped 48.8 bushels per acre heading into the August crop production report.
Amid the record yields of the past two years, it may have been hard to imagine 50-plus bpa, especially as growing conditions were favorable in those years. But with a solid argument for enormous yields out of 2016's harvest, the pressure on demand is mounting.
Although record yields of the previous two years imply fantastic weather during the soyabean growing season, this year's weather was even better.
The 2014 and 2015 seasons were perhaps a bit too wet at the start of the vegetative growth period, when soybeans actually prefer to be somewhat drier, similar to this year. But the rainfall in August is really what set 2016 apart from its predecessors.
August is the primary month for soybeans across the country to be setting and filling pods, and precipitation is key at this stage. Rain was plentiful just about everywhere in August 2016, while many major production states grappled with pockets of dryness in the previous two years.
Emily Carolan, an account manager with DuPont Pioneer, said this year's soyabean crops received stress at exactly the right times, which is how yield expectations have grown as large as they have.
"Heat and sunlight earlier in the summer helped the plants put on height and develop a good canopy," Carolan said. "The August rains extended the typical growth period, allowing plants to put on even more pods."