Late last month the USDA released some of its Long-Term Agricultural Projections and though the complete report will not be released until February, acreage and balance sheet estimates were provided for a number of markets including corn.
Much attention was paid to the USDA projected 90.0 million acre corn planted area figure which is down sharply from this year's 94.5 million figure.
What caught our eye were the USDA yield projections going out from 2017-2016 that increase by two bushels per acre (bpa) each year starting at 170.8 bpa this coming year and ends in 2026 at 188.8 bpa.
This chart shows the actual and projected USDA yields in blue along with the 30-year trend in orange, the 20-year trend in green and the 10-year trend in red.
These are linear trends of the actual yields and are extended for another ten years going out to 2026 similar to what the USDA has done.
The 10-year trend has yields increasing by 2.10 bushels per acre with the 20 year increasing at a rate of 1.84 bpa and the 30 year at 2.06 bpa per year.
Note that next year's yield is pegged at 170.8 bpa which is well below this year's new record of 175.3 bpa and even below the prior record set two years ago at 171.0 bpa and some may see that as unrealistic.
Yet by the end of the forthcoming ten-year period the final USDA projected yield is 188.8 bpa which is higher than the ten year 186.9 yield, the 20 year 184.1 yield or even the 30 year 187.9 yield.
We do know that the USDA does use a new weather adjusted yield model that uses pace of planting, precipitation and temperature data but for now a simple linear trend is being used.
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