Fundamentally Speaking
Joel Karlin DTN Contributing Analyst

Thursday 09/13/12

Sep to Oct Historical Corn Changes

The September crop report has come and passed and it appears that the USDA punted as far as corn is concerned.

Contrary to trade expectations, the U.S. 2012 crop size was lowered only modestly by 52 million bushels vs. an average guess of a 400 million decline based on a small yield cut of 0.6 bushels per acre (bpa) as opposed to the anticipated 2.8 bpa decline.

Harvested acreage was also unchanged at 87.4 million resulting in a 90.7% harvested to planted ratio, which is very high relative to past drought years.

Looking ahead to the October report, this graphic shows the percent change from the September to October crop report for corn in terms of production, yield, and harvested acreage.

The darker blue columns represent those years where production was lowered from the August to the September report.

We start there noting that in three of the past four years production fell from the September to the October report after falling also from Aug to Sep.

Three of the biggest percent declines in production from the Sep to the Oct report came in weather years of 1993, 1995, and 2010.

Both 1995 and 2010 saw hot temperatures that summer while 1993 losses were linked to flooding that season.

What is interesting is that production changes whether up or down are linked more revisions in yield as opposed to a change in the harvested acreage.

This is evidenced by a correlation coefficient between production and yield changes of 97.8% vs. a coefficient between production and harvested acreage changes of 26.4%.

Interesting is the fact that prior to 2005 the USDA made very few harvested acreage changes between the September and October reports save for declines posted in the 1988 drought year and 1993 flood year.

Since 2005 there has been better information exchange between the various USDA branches, particularly the Farm Service Agency and acreage changes are now more frequent.

As for the October crop production report, it should provide the trade with a clearer picture of what was actually produced.

Given the old adage that short crops get smaller and noting the August to September yield decline it appears that another drop will be forthcoming while harvested acreage also looks to drop even though planted acreage may be adjusted higher.


Posted at 7:52AM CDT 09/13/12
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