In a recent Fundamentally Speaking blog on April 17, DTN Contributing Analyst Joe Karlin points to concerns of slow corn planting progress while the market had failed to show concern. Fast forward to the last day of April, weather continues to remain undesirable for much of North America's corn growing area and a bullish factor for prices. Meanwhile, the daily chart continues to show upside moves met with resistance with nearby July trade holding below the contract's 20-day moving average.
The attached chart points to the potential for Canadian corn yields based on 10-, 20- and 30-year trends, which are used to project 2019 yields. This study shows a potential of 162.3 bushels per acre, 166.3 bpa and 161.8 bpa, respectively.
Annual gains are calculated at 2.02 bpa based on the 10-year trend, 2.7 bpa for the 20-year trend and 2.1 bpa for the 30-year trend. The 20-year trend results in a steeper line on the chart (grey line) and a larger annual increase. This is mostly due to a significant annual drop in yield in 2000 of 21% and a four-year period for yields to retrace to 1999 levels. The 10-year and 30-year trends are taking place at a very similar rate.
This range of results is higher than Statistics Canada's actual five-year 2014-to-2018 average of 156.3 bpa, as well as the current estimate of 155.3 bpa utilized by Agriculture and Agri-Food Canada in April supply and demand estimates.
While current AAFC forecasts include a sharp drop in expected imports in the 2019-20 crop year, should yields approach trend line levels, increased exports will be needed to avoid a build in stocks over the 2 million metric tons currently forecast for the 2017-18 crop year and the 2018-19 crop year.
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Cliff Jamieson can be reached at firstname.lastname@example.org
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