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Corn yield growth slowing -- Rabobank

03/13/2012 @ 1:01pm

Growth in U.S. corn yields is likely to be sluggish for the next few years, as farmers' expansion into the U.S. Plains and their abandonment of typical crop rotations limits average output, Rabobank said in a report released Tuesday.

The Netherlands-based agricultural lender projected the average 2012 U.S. corn yield at 156 bushels per acre, which would be up sharply from the 2011 yield of 147.2 but well below the USDA's most recent projection of 164 bushels per acre.

Such forecasts are largely speculative at this point in the season, as the crop hasn't been planted yet and will be affected by unforeseen weather conditions. Rabobank said the range of probable average yields extends from 146 bushels per acre to 168.

Rabobank said that in the longer term, yield projections based on past trends will likely be unreliable over the next few years due to structural changes in the U.S. corn crop, as farmers in the U.S. Plains, including Kansas and the Dakotas, are planting an increasing proportion of the country's corn acreage. High corn prices have encouraged more planting in those areas, which typically yield less than farms in Iowa, Minnesota, Illinois and Indiana.

"The result of such a shift in yield expectations makes the probability of lower average per-acre production more likely over at least the next five years," Rabobank said in the report.

High corn prices have also prompted more farmers in the best-yielding states to plant corn in consecutive years, rather than rotating a soybean crop every two or three years, Rabobank noted. While that decision can make economic sense for farmers, agronomists say that corn yields are typically lower when the soil has been planted with corn in consecutive years.

Rabobank added that farmers may have reached their limit, at least temporarily, on how many corn plants per acre they can plant. Increased plants-per-acre have been a key driver of yield growth, the bank said.

Meanwhile, seed companies have "few yield game changers" on the horizon, the bank said.

The slowing yield growth means farmers will need to continue planting a large corn crop to keep up with demand, and competition for corn supplies will remain intense, Rabobank said.

The USDA has projected farmers will plant 94 million acres of corn this year, the most since World War II.

-By Ian Berry, Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com
(END) Dow Jones Newswires
March 13, 2012 12:39 ET (16:39 GMT)
DJ Rabobank Sees Slow Corn Yield Growth, 2012 Projection Below USDA->copyright

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