Urbana, Illinois
August 6, 2007
Those who argue that the 2007 corn
crop is already "made" and out of harm's way are ignoring
history, said a University of
Illinois Extension marketing specialist.
"Models relating trend yield and state average monthly
precipitation and temperature to actual state average yields in
Illinois, Indiana, and Iowa indicate that August weather has a
significant impact on average yields," said Darrel Good.
"While August precipitation has less impact than July
precipitation on average yields, August temperature appears to
have an equal or large impact than July temperatures, based on
research by Mike Tunnura of the U of I Department of
Agricultural and Consumer Economics."
Good's comments came as he reviewed corn yield expectations.
Corn prices have declined sharply since mid-June, reflecting a
combination of a slowdown in the rate of exports and growing
confidence that the 2007 crop will be large. The USDA's June
Grain Stocks report also implied a substantial decline in the
rate of domestic feed and residual use of corn and the Acreage
report showed a larger-than-expected increase in planted acreage
of corn.
"By the end of July, the market had grown increasingly confident
that the 2007 U.S. average corn yield would exceed trend value
and would exceed the early USDA calculation of average yield
based on trend, planting date, and normal weather," said Good.
"That calculation of 150.3 bushels per acre, along with the
projection of 85.4 million acres of corn harvested for grain,
results in a 2007 production forecast of 12.84 billion bushels.
"At that level of production, the USDA projected that stocks of
corn would grow from 1.137 billion bushels on Sept. 1, 2007 to
1.502 billion bushels on Sept. 1, 2008."
Pointing to July weather that was generally favorable for the
completion of pollination, many analysts anticipated a crop in
excess of 13 million bushels. Yield expectations as high as 160
bushels have been reported, suggesting a 2007 crop of 13.66
billion bushels. Pointing to declining crop condition ratings
and a warm start to August, however, yield expectations as low
as 145 bushels have also been reported.
"An average yield at that level would suggest a 2007 harvest of
only about 12.38 billion bushels," Good noted. "Expectations now
seem to be centering on a range of 148 to 153 bushels."
The USDA has been providing weekly reports of observed crop
conditions in the major corn-producing states since 1986. Over
that period, there has been a relatively strong relationship
between the U.S. average trend-adjusted yield and the percent of
the crop rated in good or excellent condition in the last report
of the season.
"Using the trend increase in yields since 1960, the relationship
explains about 80 percent of the annual variation in
trend-adjusted yields from 1986 through 2006," said Good. "Using
the trend increase in yields since 1986, the relationship
explains about 88 percent of the annual variation of
trend-adjusted yields, according to an analysis provided by
Scott Irwin of the U of I Department of Agricultural and
Consumer Economics.
"If crop conditions at the end of the season remained near the
levels reported on July 29, 58 percent good or excellent, the
models would project 2007 average yields of 145 bushels and
148.4 bushels, respectively. Over the past eight years, these
models have tended to underestimate the U.S. average yield."
For the model based on the trend yield since 1960, the size of
the underestimate ranged from 1.75 bushels in 2000 to 10.25
bushels in 2004, Good added. The average underestimate was 4.9
bushels.
For the model based on the trend yield since 1986, the size of
the underestimate ranged from 0.44 bushels in 2000 to 7.41
bushels in 2004. In 2006, however, the model overestimated the
U.S. average yield by 0.42 bushels. Over the past eight years,
the average difference between the forecast yield using this
model and actual yield was 2.85 bushels.
"Based on current crop condition ratings and the average model
errors over the past eight years, 2007 yield potential appears
to be in the range of 150 to 151 bushels," said Good. "Yield
expectations based on current crop conditions can obviously only
be used as a guide in forming expectations about actual yield
since the correlation between ratings and yield is less than
perfect and ratings may change by the end of the season."
The USDA will release the first yield and production forecast
for the 2007 crop on Aug. 10. The forecast will be based on a
combination of factors, including field observations in 10
states and national farm operator surveys (about 27,000 in
2006).
"That input will reflect conditions through early August so that
subsequent forecasts will be influenced by August and September
weather," said Good. "Over the past 11 years of generally
favorable growing conditions, the average yield forecast in
August was below the January estimate following harvest in eight
years.
"In those eight years, the January estimate exceeded the August
forecast by an average of 5.8 bushels, in a range of 1.7 to 11.5
bushels. The January estimate was below the August forecast in
1999, 2000, and 2006, by an average of 2.9 bushels and in a
range from 0.9 to 4.8 bushels.
By Bob
Sampson, University of
Illinois |
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