Where should we be now with corn yield expectations?
What about the chances for a yield near trend value? To achieve a trend U.S. average yield, high yields in those states with very favorable growing conditions would have to offset low yields in those states with unfavorable conditions. That currently seems highly unlikely for two reasons.
First there are currently 72 percent more corn acres in those states experiencing very poor growing conditions than in those states with very favorable conditions. The second reason is that the yield impact of weather is not linear. That is, poor weather tends to reduce yield proportionately more than good weather increases yield. That can be seen in Figure 1 which shows actual U.S. average yields and the linear trend of those yields from 1960 through 2011.
Deviations from trend tend to be larger when yields are below trend (bad weather) than when yields are above trend (good weather). The non-linear impact of weather is also illustrated in Figure 2 which shows the impact of the level of precipitation in July on the state average corn yield in Illinois, Indiana, and Iowa. The relationship is derived from a crop weather model of corn yields in those three states published in this report.
Notice that the average July precipitation in each state (marked as X) is near 4 inches. Yields tend to fall rapidly as precipitation declines below 4 inches, but increases slowly for precipitation levels above 4 inches. A similar, but less distinct, relationship exists for June precipitation as well. These relationships suggest that yield losses in those states with less than average summer precipitation in 2012 will be greater than the yield gains in those states with above average precipitation. The result would be an average yield below trend value.
In addition to the yield implication of the magnitude and distribution of summer precipitation is the yield implication of summer temperatures. The weather models reveal a negative, but linear, relationship between monthly average temperatures in July and August and state average corn yields (illustrated in Figure 3). If the current and upcoming period of above average temperatures extends further into the growing season, additional yield losses would be expected.
Current conditions point to a U.S. average corn yield below trend again in 2012, but the extent of the yield shortfall will remain uncertain for another 10 weeks. With the large increase in corn acreage this year, an average yield above 150 bushels would require minimal rationing during the year ahead. Based on current and upcoming weather conditions, however, there is risk that the average yield will fall below that level, requiring higher prices to ration the crop. The USDA’s June 29 Acreage report, on-going weather conditions, and weekly crop condition ratings will be followed closely in order to assess production prospects. The USDA’s National Agricultural Statistics Service will provide the first survey-based yield forecast of the season in the August 10 Crop Production report.