Soybeans continue to show strong demand both globally and domestically. In return you have domestic crushers trying to bid for bushels that U.S. exporters desperately need for ships that are waiting. The bears continue to point to much better yields being reported by U.S. producers. In fact, many sources are thinking U.S. yields could jump from the current USDA estimate of 41.2 bpa to 43 bpa or even higher. I understand the bears reasoning, but I am just not in that camp. There are two main reasons why I do NOT believe US soybean yields will move dramatically higher.
- When the USDA came out with the 41.2 bpa yield many in the trade were screaming that the yield should be much lower, perhaps as low as 37-38 bushels per acre. I have learned through the years that those who experience the most extremes tend to make the most noise. Therefore you have to recognize the fact we were primarily hearing all of the bad horror stories. Producers with good yields and good crops obviously didn't want to jinx themselves and or announce their findings until the crop was further along. In return, and having seen the same scenario on several occasions, the USDA wisely elected to play it safe by choosing to only move moderately to the downside. By choosing not to move aggressively to the downside they might not have to move aggressively back to the upside.
- Now all of a sudden, rather than the "woe is me" producer, we instead are starting to hear from the producers who are beating their chest and have become overly excited about their "better-than-expected" yields. Like I said above, those who experience the most "extremes" (either good or bad) tend to make the most noise. Most all conversation with these producers starts out like this, "My beans look great, BUT a lot of my neighbors really got hit hard and don't look so good..." My point is that a lot of the folks sending in yields or calling into the analyst are the ones who are extremely happy with their results. Therefore, even though I believe yields have improved across the board, I find it hard to believe the USDA will push the number back above 43 bpa.