Most of the main U.S. corn and soybean production belt experienced warm, dry weather during the second half of August, injecting some doubt about U.S. crop prospects into the markets as we approach USDA’s September Crop Production report, due out next Thursday. While crop ratings have deteriorated moderately in the past three weeks, the ratings appear to favor a steady U.S. corn yield and an increase in USDA’s U.S. soybean yield forecast compared with the August report.
The highest degree of uncertainty going into the report surrounds soybean yields since much of the crop was going through its key growing stage when the hot, dry weather hit. However, regression analysis of our Brock Crop Index, which is based on USDA’s weekly crop ratings, versus final U.S. soybean yields suggests a hefty U.S. yield of 55.1 bushels per acre, 1.9 bushels above USDA’s August estimate. What’s more, the correlation between the crop index readings and final yields has strengthened significantly since we last did this analysis three weeks ago, although it is still only moderately strong.
Perhaps more telling is the fact that in nine previous years since 1986 when the U.S. soybean crop rating was as strong or better than this year’s 65% good/excellent as of week 35, the final yield topped the linear 20-year trend every time by anywhere from 1.4% to 18.3%. The high end of that range is not in the realm of possibility this year – in 1994, when that happened, the crop rating was a stellar 72% good/excellent. Narrowing things down a bit, in four previous years when conditions were rated 65%-66% good/excellent as of week 35, the final yield ranged from 1.4% to 7.3% above trend. Based on this year’s 20-year trendline yield of 52.2 bushels, that suggests a final U.S. yield of 52.9 to 56.0 bushels.
Looking at what the U.S. corn crop rating says about the potential national yield, we see that regression analysis of the Brock Crop Index versus final yields suggests a U.S. yield of 183.5 bushels per acre, 0.4 bushels above USDA’s August estimate. This late in the growing season, the correlation between the Index and final corn yields is statistically strong with an r-squared value of nearly 71%, meaning that about 71% of the variability in yields can be explained by the index. However, that does still leave a good amount of wiggle room for yield to change.
Looking at 14 previous years since 1986 when corn conditions were rated 65% good/excellent or better in week 35, we see the final yield wound up above the 20-year trend 13 times, by anywhere from 2.6% to 14.8%. This year’s trend yield is 179 bushels, so even a 2.6% rise above that would put the U.S. yield at 183.7 bushels. The only exception was in 2010 when consistently high temperatures during grain-fill pushed the crop to maturity.
