Fundamentally Speaking

Corn Crop Conditions vs. Final Yields

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

In the May 2015 WASDE report, the USDA kept its 2015 U.S. corn yield estimate at the 166.8 bushels per acre (bpa) figure they used at their annual Ag Outlook Forum back in February.

There had been talk that the accelerated pace of plantings this spring may have prompted them to increase its yield estimate but that was not the case for though seedings are ahead of the five year average, the 2010-2014 period contains some very slow planting seasons.

Nonetheless, when the USDA releases its first corn crop condition report most likely on May 26th, it is expected the initial corn crop ratings will come in above average based on the accelerated pace of seedings and emergence and generally favorable moisture conditions through much of the key growing regions.

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The fact is the growing season is long and good early season crop conditions are no guarantee of trend or higher final yields.

This graphic shows the correlation coefficient between U.S. corn crop conditions by week and the percent that the final yield deviates from the 1986-2014 trend.

To calculate crop conditions we incorporate 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.

The starting point is week 20 of the year which is usually the third week of May and goes through week 42 which is the third week of October.

Note how the correlation increases as the season goes on with the highest correlation to the deviation from trend yields seen in week 29 that is usually the third week of July, just a week or two usually after pollination with the coefficient at 87.5%.

The correlation coefficients then start to decline in a gradual manner though remain at relatively high levels.

We note that the highest coefficient is for week 42 but the crop has already been made at that point with harvest by that point in the season often close to complete.

Furthermore, since 1986 there have been only ten condition reports issued that late in the season vs. 30 week 29 observations.

(KA)

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Freeport IL
5/18/2015 | 12:20 PM CDT
Historic very slow (too wet) or very fast (too dry) detrended planting pace has resulted in the lowest US corn yields as viewed from a percent of trend line yield. This year's planting pace has, from a historic point of view, removed the very low US yields from the picture. There is still a chance to see the CME print a mid $4.00 or better number but that chance has drop in half (our guess is currently one in 6 to 7 years) if planting pace has anything to do with US yield. One may want to think how that price level and multi-year corn sales would work - or not- for your operation. To us it seems there could be enough flex in the planted corn acres to keep the risk for high prices about the same whether or not a low yield materializes this year or not. (A low US yield/high price would result in more acres next year and visa versa.) The big risk is a new RFS standard. Every operation is different and has different abilities, needs and requirements. So it is provided here as food for thought. Freeport, IL