Uncertainty about the NASS October forecast and the final estimate of the U.S. average soybean yield also reflects late-season heat and dryness in a large portion of the production area and late maturity in some areas. Good said that some of the impact of adverse weather was likely reflected in the September yield forecast that was 1.4 bushels below the August forecast. “Most do not expect the October forecast to be above the September forecast, but there is little agreement on the possible magnitude of a smaller forecast,” Good said.
Over the past 40 years, the decline in the U.S. average yield forecast from September to October was one bushel or more in only five years: 1974 (1.1 bushels), 1980 (1.0 bushel), 1995 (1.1 bushels), 1998 (1.9 bushels), and 2003 (2.4 bushels).
“Given the severity of August and early September weather, a decline of one bushel or more certainly seems possible this year,” Good said. “However, a decline of 0.3 bushel or more would point to the need to further reduce consumption of U.S. soybeans during the current marketing year unless harvested acreage exceeds the current estimate. The confidence in the current NASS forecast of harvested acreage is bolstered by the additional survey efforts in July.
“At this juncture, there is a high probability that the 2013 U.S. corn crop will be large enough to result in a meaningful increase in stocks by the end of the current marketing year,” Good said. “Prospects of ample supplies point to an average marketing-year farm price in the mid-$4 range. Cash prices would be expected to follow a typical large-crop pattern of establishing lows at harvest time followed by modest increases that would about cover the cost of storage,” he said.
Good concluded that soybean prices are expected to remain high relative to corn prices with a marketing-year average farm price in the high-$12 range. “The price pattern for soybeans may follow more of a short-crop pattern, however, particularly if the production forecast declines in October,” Good said. “Such a pattern would point to the highest prices at harvest and declining prices as consumption adjusts and the South American crop advances.”