Fundamentally Speaking

Despite a slow corn planting pace in parts of the Upper Midwest and rather dry conditions in areas of the central and southern Midwest, expectations were that the initial U.S. corn crop rating would come in very high.

Even though there is a low correlation between the first corn crop ratings of the year and final yields, the trade does pay attention and early word is indicating corn stands are numerous and healthy with dry top-soils encouraging the plants to establish an extensive root system, always a positive development.

There are also very few incidents of drown out spots which has been a problem in recent years.

We understand that trade expectations were that 72% of the crop would be rated either in the good or excellent categories in a range of 67-76% but a full 79% of the crop was placed in one of the top two categories this season, one of the best ever since national ratings were introduced in 1986.

In fact, using 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 first national corn crop rating for 2018 comes in at 782 which according to our records ties 2007 and 1987 as the second best initial crop rating ever, only exceeded by the 794 rating in 1991.

As we had noted earlier, a strong start to the season is no guarantee that things will finish that way and this graphic which reports the first crop rating of the year, the date issued and the percent that final corn yields deviated from the 30 year trend attests to that.

In 2007 that 782 rating did result in a final corn yield that season 1.6% above trend and in 1987 a similar rating did produce a record corn yield at that time 8.6% above trend.

In 1991 however after a favorable spring weather growing conditions deteriorated in the summer resulting in final yields that season 7.9% below trend.

Consider also that the correlation between early season crop ratings and the percent that yields deviate from trend is in the 20-30% area.

(BAS)

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