Fundamentally Speaking
Joel Karlin DTN Contributing Analyst

Wednesday 07/23/14

7/20 Corn Conditions vs. August Yield Estimates

Though large areas of the Midwest have been trending dry for the better part of July, temperatures averaging well below normal have helped conserve moisture supplies while providing a big boost to corn as it goes through its critical reproductive phase.

As a consequence, ratings for this year's U.S. crop are the fifth best ever since the USDA crop condition report data series began back in 1986.

Current ratings are just slightly below those seen in 2004, a year when final yields more were than 12% above the 25 year trend.

The lofty crop ratings are adding to expectations that the U.S. will produce its largest corn crop ever helped by a record yield.

The trade is eagerly anticipating the August 12 crop production report where the USDA will answer the question of how big is big.

This graphic shows national crop ratings as of July 20 vs the percent that the USDA's August corn yield estimate deviated from the 1980-2013 trend of USDA August corn yield estimates.

Incorporating our usual ratings system where we weight the crop based on the percent in each category and assign that category a factor of 2 for very poor, 4 for poor, 6 for fair, 8 for good, and 10 for excellent and then sum the results, U.S. crop conditions as of July 20 calculate to 784.

This is the highest rating since 787 back in 2004 with 829 in 1994, 833 in 1987 and 830 in 1986.

The logarithmic trend-line provides a very good fit and explains over 83% of the variability in USDA August corn yield estimates.

Plugging this year's 7/20/14 rating of 784 into the formula results in a prospective 2013 U.S. corn yield of 168.2 bushels per acre (bpa), a new record exceeding the prior peak of 164.7 bpa set in 2009.

Given widespread talk that the final yield this year assuming the crop finishes out well will be north of 170 bpa, this 168.2 bpa seems rather low.

Keep in mind that we are using the August, not final yields for our trend calculations.

Second is that while this year's July 20 rating is extraordinarily high, it is not over the 800 level seen in past record high years.

Finally the USDA has plenty of time to increase its yield estimates and note that in record yielding seasons such as 1992, 1994, and 2004 the U.S. estimate has been increased by more than 10 bushels an acre from the August to final projection given in January's annual crop production report.

(KA)

Posted at 10:20AM CDT 07/23/14
Comments (1)
Why are there more dots then years? I count 28 dots for supposedly 23 years.
Posted by Unknown at 12:10PM CDT 07/23/14
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