Fundamentally Speaking

The September crop production report is scheduled for release on the 12th and even though some early trade estimates have coalesced very close to last month's record USDA forecast of 183.1 bushels per acre (bpa), the corn market has managed to bounce close to 30 cents off recent contract low in December contract of $3.85.

Over the past few days, a farmer survey conducted by Allendale forecast the U.S. 2024 corn yield at 182.53 bpa.

This comes as Linn & Associates forecast a yield of 182.25 bpa while StoneX raised its estimate to 182.9 bpa from 182.3 in its previous monthly report.

Finally, S&P Global pegged the corn yield at 184 vs. 183.1 last month.

Despite not being the most favorable finishing weather in terms of moisture, it appears that the corn crop was far enough along where a very dry last half of August that has continued into the first week of September (especially in the southern Midwest, Ohio Valley region and Delta over past month) has probably taken a larger toll on the soybeans grown in those regions of the country.

Despite expectations of a 1-2% drop in corn crop ratings this past week, the combined percent rated in the good to excellent categories remains at 65% vs just 53% last year even though the 2023 yield turned out to be record high at 177.3 bpa.

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), this graph plots the percent change in the U.S. and top 18 corn growing states ratings as of the beginning of this month vs. the first week of September ratings a year ago and also the percent change in yields from the August 2024 USDA projection vs. the final 2023 yields also for each of the top states and the U.S.

Crop ratings for each state as of September 2, 2024, are recorded in the orange boxes.

There is a strong relation between the change in corn crop ratings as of the first week in September vs. the percent change in yields vs. a year ago with the correlation over 86%.

It is pretty clear that high positive ratings changes are associated with an increase in yield as the highest rating as of the beginning of September this year is Iowa at 782, which is 17.1% above its year ago rating and with yields of 209 bpa at just 4% above last year, this is a state where the USDA may increase its yield from its August projection.

A similar situation is seen in Missouri where the current rating of 778 is the second highest and the most above the year ago condition at up 39.4% and yield of 181, up 18.3% from the year ago 153 bpa.

The worst rating in terms of number and relative to a year ago is NC with rating of 378, down a huge 49% vs. last year's 740 and even though USDA has that state's corn yield pegged at 100 bpa, down 32% from last year's 147 bpa yield, the September crop report is likely to post even a lower yield.

Ohio is another state that probably will see downward revision in yield with the beginning of September crop ratings down 22.2% from 2023, yet yield is down only 5.1%.

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