September WASDE Report: Record Soybean Yields Bring Record Crop

On Wednesday, the USDA released its monthly WASDE report, which included record soybean yields to create record production. However, there were a few additional surprises that will affect soybean prices in the weeks ahead.

On Wednesday, the USDA released the September WASDE report, which offered a few key updates to the global soybeans crop. Going into the report, the market was quite bearish, expecting to see 2018/19 ending stocks in the US top 800 million bushels and 100 MMT globally.

However, the numbers turned out to be even more bearish than analysts expected. Now only did U.S. stocks hit an astounding 845 million bushels, but global stocks popped another 2.7 MMT to touch just north of 108 MMT.

Here’s our breakdown of the numbers.

The USDA’s September WASDE report showed the market that American farmers will produce 4.693 billion bushels of soybeans in 2018. This figure is 107 million bushels higher than the 4.586 billion bushels projected by the USDA in August 2018. Going into the report, the average guesstimate for US soybean production was 4.643 billion bushels.

Compared to the five-year average of 3.98 billion bushels, 2018/19 American soybean production will be 18% higher.

us soybean production

The reason for the increase in production was mainly attributed to average US soybean yields being re-adjusted to 52.8 bushels per acre (bpa). This is a new record and surpassed average trade expectations.

Compare this to the USDA’s estimates from the August WASDE of 51.6 bpa for soybeans, the pre-report average expectations from Reuters of 52.2, Bloomberg average guesstimates at 52.3, and the ProFarmer Crop Tour estimate of 53 bpa. Prior to the report, there was some skepticism about the numbers retrieved from the crop tour, but today’s report appears to have vindicated these analysts.

From a demand perspective, we can look to ending stocks to get an idea of where we sit.

us soybeans ending stocks

The USDA estimated that U.S. 2018/19 soybean ending stocks will be 845 million bushels, an increase of 113.9% year-over-year. For American soybeans, average trade expectations before the report via Reuters was for 830 million bushels, so this estimate could be viewed as bearish.

From a global carryout perspective, 2017/18 soybean stocks were revised by the USDA to 94.74 MMT. That figure is about 0.5 MMT lower than the average projection of 95.2 MMT held by analysts before the report. It’s also 0.9 MMT higher/lower than the August 2017/18 global soybean stocks estimate of 95.6 MMT.

Thinking into the new crop, year, the agency says that 2018/19 global ending stocks will come in at 108.3 MMT. Compared to the 2017/18 number mentioned above, this is a bearish jump of 14.2% year-over-year. Going into the report, the market was expecting 107.5 MMT, and August’s number was 105.9 MMT.

Naturally, these figures are not the only factors driving grain prices today. However, in Chicago, the bulk of the chatter centered heavily on the surprising uptick in yields.

Over the next 48 hours, we’ll be diving deeper into the report to identify the other factors that you must consider when planning your grain marketing in the weeks and months ahead. These include:

  • The surprising decision by the USDA not to change production estimates in Brazil and Argentina.
  • The 1.5 MMT decrease in Chinese crush expectations. The drop from 95 MMT to 93.5 MMT could go even further due to a breakout of swine fever that is hindering their livestock industry.
  • The uptick in U.S. soybean crushing at a time that processors benefit from lower prices.  
H/T: September 2018 WASDE
About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.