Fundamentally Speaking

History of USDA Ag Outlook Forum Yield Estimates


Joel Karlin
DTN Contributing Analyst

After a positive reaction following the bullishly construed USDA reports issued on January 11, the grain and oilseed contracts have settled into wide trading ranges awaiting new fundamental inputs.

We suspect that South American weather will have the most impact as the Argentine and Brazilian corn and soybean crops move closer to their critical developmental periods. 

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There will also be updated supply-demand information released on February 8, though the USDA numbers that will attract even greater interest are the initial 2013-14 balance sheets for the major crops that will be provided at their annual Agricultural Outlook Forum February 21-22.

In light of the adverse growing weather seen in recent years there has been quite a bit of interest as to where government forecasters will peg the estimated 2013 yields, especially for corn and soybeans.

The accompanying graphic shows the projected yields from 1998 to 2012 for wheat, corn, and soybeans and based on this 15 year history, a calculated 2013 trend yield is provided.

Looking at the numbers shows that the USDA usually goes for some sort of trend yield and as consequence, each year provides a new record high yield estimate relative to their past predictions.

Based on the 1998-2012 numbers, a 15 year trend works out to a 44.4 bushel per acre (bpa) yield for wheat, 166.8 for corn, and 43.6 for soybeans.

The wheat figure may strike some as high given the ongoing drought problems with the hard red winter wheat crop but compared to the 2012 yield of 46.3bpa this looks reasonable.

The 43.6 bpa estimate for soybeans is almost exactly what has been seen on other prospective 2013-14 balance sheets.

The corn figure however at 166.8 bpa, a new record high if achieved looks very optimistic given that the 15 year trend using actual yields comes in at 152.0 bushels per acre.

(KA)

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Freeport IL
1/28/2013 | 1:56 PM CST
Adjustments to one's corn marketing plan may be dependent upon a persistent drought in the western corn-belt. That dryness may not reduce production as much as one would think. The NOAA January 17, 2013 Drought Out shows a large area in the western and southeastern US where the drought is expected to persist into the spring. This area accounts for about 26 million planted acres of corn. Something like 10.5 million acres are irrigated with something like 15.5 million acres dry land. Irrigated yields in these areas have ranged from a low of 173 bushels per harvested acre last year to a high of 198 in 2009. The dry land crop ranged from a low of 90 bushels per acre in 2006, a high of 134 in 2009 and 100 bushels per acre in 2012. If historic relationships hold and the area produces the lowest historic yield (last ten years), we would expect production to drop 880 million bushel from an average outcome. This decline would show up as a 7.1 bushel per acre decline in US yield, if other parts of the country produce around a trend line yield. A decline of this level would be significant but not the "Game Changer" one might expect. (Our guess shows harvest prices, on the board, moving up $0.75/bushel from $5.50 to $6.25). One might need a "wider" drought fear and/or large failed wheat acres to see price rallies/levels of the past years. Freeport, IL