Yield Estimates May Be Hit, Analyst Says
We believe Pro Farmer may have hit the nail on the head with this year’s crop tour for both corn and soybeans. Its corn yield estimate of 170.2 (August 30 crop tour) compares to the USDA’s estimate of 175 (August Supply and Demand report).
USDA’s 175 is a 7-bushel increase from the trendline yield figure used in previous reports. Our research also suggests that a 175-bushel yield is too high. With increased acres and some issues with ear tip-back, as well as weather constraints on the fringes of the Midwest, we believe final yield is likely to be between 168 and 171 bushels per acre.
In beans, good weather in August (due mostly to rain), as well as a generally good growing season, suggests this year’s bean crop will likely be record large. USDA’s August yield forecast of 48.9 was .4 bushels less than the private ag company’s August tour estimate at 49.3 bushels.
The old saying is "rain makes grain," and this is certainly true for beans. Big plants had many farmers scratching their heads, wondering if it would be another year of big plants and disappointing results. Any veteran farmer will tell you the size of the bean plant may have little to do with yield.
What generally does have a high correlation with yield is adequate moisture, which most of the Midwest received. We believe a national average yield of over 49 bushels per acre is highly likely.
The bottom line is that if the numbers pan out, this year’s crops will be record large (or close to record large). Most U.S. farmers were again blessed with good weather, making their fourth consecutive large crop after the debilitating drought of 2012.
Unfortunately, the hangover effect is larger supply and prolonged periods of low prices. This will humble even the most confident farmer.
Even with low prices, the market still provided marketing opportunities this year, and those who were prepared were likely able to capitalize on them. The other positive, other than big production, is that big supplies lead to big demand. Eventually, prices will move higher.
If you have questions or comments, or would like help in creating a balanced strategy for your operation, contact Bryan at Top Farmer Intelligence (800-TOP-FARM ext. 129).
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