Market Matters Blog

USDA Chief Economist Joe Glauber made the case for a return to normal yields in 2013, while pegging corn acreage at 96.5 million acres, and soybean acres at 77.5 ma. He expects farmers will plant a little less corn than last year because of the drier conditions. Planting conditions were near perfect last year, and Glauber said that that’s why acreage isn’t expected to reached to last year’s record level.

Still, he expects record production of 14.35 billion bushels of corn and 3.405 billion bushels of soybeans.

The critical question: why a return to normal yields? Eastern Corn Belt states look better than they did 3 months ago, he said, and the total area still classified to be in drought has improved, giving the crop a better chance.

More importantly, empirical studies suggest there’s little correlation between rainfall in one year and rain in another, he argued. And there’s also little correlation between preseason moisture levels and final yields; he showed a scatter plot chart of the last 30 years or so comparing end of the year yields and preseason moisture. It was all over the map, illustrating his point.

“There’s no reason to necessarily think we’ll be looking at a poor crop,” he said. “Obviously the big issue, the critical factor people will be following here is weather. However, empirical data suggest a return to more normal yields.”

I think it’s important to note that Glauber repeated that yields are expected to return to normal, not trend line. It may be a small semantic difference, but it’s probably deliberate and a hint about the yield figures USDA will use in its early projections that will be released early Friday morning. USDA will update its supply and demand tables tomorrow as well release initial planted acreage, yield and production estimates. Stay tuned.

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