Fundamentally Speaking

Joel Karlin
DTN Contributing Analyst

Similar to the exercise we did on soybeans earlier in the month, we ran a simple regression model to estimate the percent that final U.S. corn yields deviated from trend using end of September crop conditions as the explanatory variable.

Using our usual rating system where we weight the crop based on the percent in each category and assign that category a factor of 2 for VP, 4 for P, 6 for F, 8 for G, and 10 for EX and then sum the results the end of September figure this year is 696.

This is 190 points higher than the end of September rating a year ago of 502 that is the worst number we have in our database and the highest for this time of year in three seasons.

The accompanying graphic shows a scatterplot of end of September U.S. corn crop conditions and the percent that final yields deviated from the 1986-2012 trend.

The high R squared indicates that these crop ratings explain about 77% of the variability in percent of final yield deviation.

Plugging the 696 into the equation indicates a 2013 prospective corn yield 2.6% below trend.

There has been quite a bit of discussion as to what the 2013 trend should be given the recent poor performance of U.S. corn yields.

It appears that the trade is using a figure of 160 bushels per acre (bpa) though the USDA started using a figure of 163.6.

The range of values then using this 2.6% below trend figure would result in a corn yield of 155.9-159.4 bpa.

With harvest results so far exceeding farmer expectations by a wide margin, there is consensus that whenever the USDA released the October crop production report, corn yields should edge higher from the 155.3 bpa given last month.

(KA)

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