Fundamentally Speaking

Will USDA Lower 2013 Corn Yield in June WASDE?

Earlier this month the USDA lowered its expected 2013 U.S. corn yield by 5.6 bushels per acre (bpa) to 158.0 from the 163.6 bpa figure given at their annual Agricultural Outlook Forum sessions that took place in February.

As mentioned in prior pieces, the USDA is using a new weather adjusted yield model to predict corn and soybean yields and for corn, one of the explanatory variables is mid-May planting progress.

The USDA makes mention that fast planting progress is generally beneficial for yields in that it allows the critical stages of crop development, especially pollination to occur earlier prior to the most severe heat of the summer.

Furthermore, early pollination is usually associated with less plant stress from moisture shortages. For this variable, the USDA uses eight top corn producing states that in the past have accounted for an average 76% of U.S. output over the past ten years including IA, IL, IN, MN, MO, NE, OH, and SD.

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These weights of these states are apportioned according to their amount of harvested acreage.

The USDA assumes that by May 15, 80% of the intended corn acreage in these states are planted and with a coefficient of 0.28 a percent above or below that results in either raising or lowering the yield by this amount.

Given that the USDA reduced the yield by 5.8 bpa from their February projection implies the USDA thought that by May 15 only 60% of the eight state total acreage would be planted.

Based on this week’s crop progress report it turns out that only 46% of the eight state total was in the ground, a 34% shortfall from the USDA assumption.

This suggests that the yield actually should have been lowered by 9.5 bushels per acre resulting in a yield of 154.1 bushels per acre.

Based on this information we wonder if the USDA will lower its yield estimate in the June WASDE report after having already pared its projection by 5.6 bpa.

This graphic shows the percent of the eight state total intended corn acreage planted by May 15 over the past number of years and the change if any the USDA made in its corn yield projection from the May to the June WASDE report.

Over the past 20 years the USA has only made four downward and one upward revision in its corn yield projections from the May to the June WASDE report. As indicated earlier the USDA may adjust its yield lower given that its estimate for May 15 corn planting progress was 14% too high.

On the other hand, while plantings have been late, emergence has been quicker and the USDA may take into account the beneficial moisture received over the spring that helps explain why corn seedings this year are historically late.

(KA)

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