Fundamentally Speaking

Corn Rebound From Five-Month Low

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst
Chart by Joel Karlin, DTN Contributing Analyst

For corn, one of the positive factors behind upside market action this past week are some rather disappointing early yield results out of Illinois that has some thinking USDA will lower the U.S. corn and possibly bean yields in the October report after having increased them from the August to the September report.

Seeing notes from crop scouts and traders in Illinois that the estimated 2021 corn yield at 214 bushels per acre (bpa) is too high with parts of the state seeing a lot of disease pressure from heavy rains, while other regions, especially in the north, are seeing yields get clipped by a dry finish to the growing season and picking up reports like this in other states.

Along these lines this graphic shows the August to September and then September to final yield changes in bushels per acre (bpa) on the left-hand axis vs. the week 36 rating (2nd week of September) for U.S. corn on the right-hand axis using our usual 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).

Since 1990 USDA has increased its U.S. corn yield estimate from the August to the September report 16 times including this year.

Of the past 15 occasions, 10 of those times USDA increased yields even more into the final crop report of the year though there were five occasions when the final yield was lower than the September projection.

The average increase from the August to September report is by 2.0 bpa and the average increase from that point on is another 2.9 bpa, so there is precedent for yields to rise further after USDA has boosted yields from the August to the September report.

This year USDA boosted the national yield by 1.7 bpa from August to September so just looking at history one would say there is a two-thirds chance of further increases in the 2021 corn yield by the time the final crop report of the year rolls around January 2022.

On the other hand, this year's week 36 corn rating of 704 is not too spiffy being the fourth lowest since 2005.

In years where USDA reversed track and actually posted final yields lower than the September figure after having hiked its yield estimate in the August report such as 2006 and 2007 also came in seasons where the corn rating by the second week of September was rather low.

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