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With Surprising Corn Yields, Does Weather Matter Anymore?

Yes, of course it does, one analyst says.

It seemed common sense in early summer that corn yield in 2017 would not measure up to recent years, due to weather challenges during the planting and the early growing season.

Some parts of the country were too wet, while others were too dry. Continuous rain required many to replant. The poorest crop ratings over the last decade during late June and early July (not including the drought of 2012) suggested the USDA trendline yield estimate of 171 bushels an acre might be in jeopardy. Yet, this month’s Supply and Demand report indicated a national yield of 175.4 bushels per acre, an all-time new high.

Nearly ideal weather conditions during August and September is the likeliest reason yield was so high. There are some suggesting this year’s crop was so good that the weather does not matter much anymore. I think we have to take a proper perspective when determining weather’s impact.

So, does weather matter? Of course it does. One can argue that better tillage practices, equipment, seed, and genetics, not to mention excellent farmers, all contribute to higher odds of consistently good crops.

Yet, Mother Nature still holds the biggest wild card. As we look back over this past year, the first big event that affected producers was too much rain in large portions of the Midwest. This created an environment where replanting was necessary for some, and in some cases, a second replant.

Nonetheless, seed got into the ground and, thereafter, conditions were near ideal, as warm and moist soil allowed for quick germination and growth. Moderate temperatures in midsummer and during pollination helped the late crop to yield well.
 
A second issue was reports of thin stand counts in the eastern Corn Belt. Due to wet conditions, not all seeds germinated as they were expected. Good weather helped these acres to experience an environment where plants that did survive had excellent conditions to thrive. In other words, fewer germinated seeds per acre had little impact on yield.
 
Perhaps most interesting, however, were areas that struggled due to hot and dry conditions. In particular, the western regions of the Corn Belt and the northern Plains, namely the western two-thirds of the Dakotas. Serious drought conditions were experienced until mid-July when weather conditions turned for the better. Poor looking crops improved significantly. Again, great weather, as well as great timing, was responsible for a crop turnaround.
 
As summer wore on, August turned out to be a near-ideal month for crop growth and maturity, as temperatures in the second half of July through August were on the cooler side. This allowed much of the crop to continue to mature without stress.

Then, a nearly perfect September (in which temperatures were warmer than they were during August for most of the Midwest) allowed for full crop maturity. The threat of a frost evaporated – to the relief of many producers.

It is believed by many that weather in August and September allowed the corn crop to add between 7 and 10 bushels on a national average. This is the 7 to 10 bushels an acre that most analysts were not expecting through the end of June.
 
As you can see, weather was a dominant factor for crop production in 2017. An excellent effort by farmers helped revive the crop, as well. Things like later season nitrogen application, bug control, and other important steps, coupled with good weather, all contributed to high-end yields.

With world demand continuing to edge forward, the need for significant world crops continues to become paramount. Some are suggesting that with today’s hybrids/genetics, weather doesn’t matter as much. While that may be true to an extent, the timeliness of good weather is paramount in any year.
 
Bottom line: Be prepared. 2017 experienced very good and timely weather to divert disasters and, in the end, produce record crops. If 2018 does not see a repeat of bountiful and timely rains, it won’t take long before the market responds. Be balanced in your marketing approach. Sell into rallies and purchase calls to cover these sales.
 
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If you have questions or comments, contact Top Farmer at 1-800-TOPFARM, ext. 129.
 
Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.
 
Carol Tillmann Front Desk Administrative Assistant | Stewart-Peterson Office: 800.334.9779 | Fax: 262.334.6225 ctillmann@stewart-peterson.com
www.stewart-peterson.com
 
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson. Stewart-Peterson refers to Stewart-Peterson Group Inc. and Stewart-Peterson Inc. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with both companies. Accordingly this email is sent on behalf of the company or companies providing the services discussed in the email.

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