Fundamentally Speaking

Joel Karlin
DTN Contributing Analyst

After three straight years of falling U.S. corn yields, each worse than the last which happened last from 1928-30, this year’s 160.4 bushel per acre (bpa) figure given in the November crop production report is respectable.

Given the recent history of short crops, there was quite a bit of discussion at the beginning of this year as to what a reasonable 2013 expected trend yield for corn should be.

In pieces we wrote earlier in the year, we had made mention of the new USDA weather adjusted corn yield model that had calculated the 2013 trend corn yield at 163.6 bpa.

It appears that the trade was more willing to use a figure closer to 160.0 bpa.

The accompanying graphic shows actual U.S. corn yields since 1974 along with the 10, 20, 30, and 40 year trends, all in bushels per acre.

Due to the three straight years of falling yields, the 10 year trend has turned negative indication yields falling by 0.988 bpa per year.

Actually, the 40 year trend projects the highest yields with trend growth 1.828 bpa per year vs. 1.737 bpa for the 30 year trend and 1.476 bpa for the 20 year trend.

These result in prospective 2014 corn yields having the highest figure for the 40 year trend and moving lower from there as shown in the text box.

Keep in mind that the very respectable yields produced in 2013 came despite weather that really was just so-so.

Imagine what may happen if subsoil moisture levels remain well charged, a large part of the 5.0 million plus intended acreage not planted this year goes back into production, and summer 2014 rain is better distributed.

The U.S. has not witnessed corn yields at least 10% above trend for a while and we are due.

With trend yield at 162-164 bpa next year such an event would equate to a 176-180 bpa figure for 2014 and should that occur prices would in fact return to pre-2007 levels.

(KA)