Yield losses would add pressure to already tight supplies, late season heat boosts outlook for soybean oil prices
Prolonged drought and record heat are threatening soybean yields in several key growing states across the Midwest. With most of the soybean crop still in the critical pod-setting phase that depends on moisture in August, persistent dry conditions are lowering yield projections and raising concerns about the availability of supplies.
Scouts participating in the recent Pro Framer Crop Tour found sporadic and highly variable yields for both corn and soybeans, especially across the western Corn Belt. Record high temperatures and dry conditions in August have negatively impacted both crops. At this stage of the growing season, yield loss due to ongoing heat stress is a much greater risk for soybeans than for corn.
According to a new research brief from CoBank’s Knowledge Exchange, soybeans have a much tighter supply situation than corn due to the loss of planted acres. USDA estimates soybean planted acreage fell 4.6% year-over-year this spring to the lowest level since 2020.
“If hot and dry conditions in the Midwest continue and yield loss for soybeans increases, the U.S. soybean supply will tighten further, resulting in stronger interior cash basis and lower exports,” said Tanner Ehmke, lead grains and oilseeds economist for CoBank.
Ehmke was among the scouts participating in the crop tour who observed soybean pods being aborted in the triple-digit heat. Although pod counts were higher in many states compared to last year and the three-year average, more pods will likely be aborted if hot and dry conditions continue. In addition to drought and heat stress, sudden death syndrome was widely noticed by scouts, as was white mold.
However, high temperatures late in the growing season are associated with a higher soybean oil content, according to the United States Soybean Quality Annual Report. This coincides with historically strong soybean oil prices relative to soybean meal prices, driven by the expansion in demand for renewable diesel.
“While hot temperatures during the growing season tend to cause lower protein levels in soybeans and lower soybean meal values, the combination of higher oil extraction and higher soybean oil prices will benefit processors,” said Ehmke. “Buy basis for co-ops and processors will be higher in the forthcoming crop year for soybeans, but processor margins are expected to remain strong.”
