Corn crop size tough to peg
The corn market appears to be having difficulty anticipating the likely size of the 2013 U.S. crop. Over the past three weeks, December 2013 corn futures have traded from a low of $5.12 to a high of $5.735 as production expectations continue to unfold.
Production uncertainty is the result of uncertainty over both the likely magnitude of planted acreage and yield prospects associated with late planting of the crop in many areas. Nationally, an estimated 46% of the crop was planted as of May 15 this year, compared to an average of 72% in the previous 34 years. The largest percentage of the acreage remained unplanted as of May 15 this year since 1995. An estimated 9% of the acreage was still to be planted as of June 2.
More information about planted and harvested acreage of corn for grain will be available with the USDA’s acreage report to be released on June 28. Those estimates are based primarily on data collected during the first two weeks of June. The USDA conducts two surveys during that period. One is a probability area frame survey consisting of about 11,000 parcels of land for all crops included in the survey. The parcels average about 1 square mile in size, and enumerators contact operators within the sampled parcel to account for the crop acreage.
The second survey is a probability sample of about 70,000 farm operators for all crops. Operators in this sample are contacted by mail, Internet, telephone, or personal interview to obtain information on planted and harvested acreage.
Expectations for the estimates of planted and harvested acreage of corn appear to be in a wide range for at least two reasons. First, some analysts reportedly think that the USDA’s March survey of prospective corn plantings resulted in an underestimate of farmers’ actual planting intentions. Under normal planting conditions, then, some would have expected to see a larger estimate in the June report. The second and more important reason for the wide range of expectations stems from late planting. Estimates of the number of acres that were intended for corn that have been or will be switched to another crop or not planted at all vary considerably. The June 28 report will shed some light on that issue, but the larger-than-normal amount of unplanted acreage during the survey period suggests the report will still reflect intentions in some cases.
There is also a wide range of yield expectations for the 2013 corn crop. The variation stems from the difficulty of assessing the likely impact of the combination of late planting, flooding, and replanting in some areas and timely planting and favorable growing conditions in other areas. Most appear to expect an average U.S. yield below trend value in 2013. The calculation of trend value and the expected shortfall from trend, however, vary widely. Yield prospects will take on more importance following the June 28 acreage report. Weather conditions and weekly crop condition ratings will provide some indication of yield prospects, although there has not been a strong correlation between crop ratings and yield in recent years.