Corn yields headed for 5-year low, some say
U.S. farmers may see their lowest corn yields in five years, according to some analyst estimates, after extreme Midwest heat in recent weeks hit crops during the crucial pollination stage.
This year’s corn harvest is expected to produce nationwide yields averaging 150 bushels an acre, Commodity Weather Group, LLC, a Bethesda, Md.-based consultant, said in an Aug. 2 report. That’s 5.5 percent below the U.S. Department of Agriculture’s current estimate, 158.7 bushels an acre, and would be the lowest yield since the crop averaged 149.1 bushels in 2006.
Commodity Weather Group analysts are among many who believe the USDA will downsize its crop outlook after a wet, cold spring delayed fieldwork and a recent bout of temperatures near or above 100 degrees Fahrenheit wave cooked corn fields across the Midwest. The USDA’s Crop Production report Aug. 11 is widely expected to reflect at least some shrinkage from the agency’s prior projections for a record harvest.
Joel Widenor, Commodity Weather Group’s director of agricultural services, said a lack of rain and record nighttime temperatures hurt crops in Illinois, Indiana, Missouri and other areas, potentially sending corn yields 15 percent or more below “trend” averages, he said.
“Our forecast yields have dropped significantly in many of these areas,” Widenor said. “Corn is not able to maximize yields without cool nights, and this becomes a particularly significant issue when combined with the occasional hot days and dry soils that developed in many areas.”
Average U.S. yields, along with planted and harvested acreage, are key elements in the grain industry’s summertime ritual of gauging the size of the fall harvest, and next week’s report has potential to further roil markets already in the midst of a volatile, record-setting year.
Recent corn yield projections range from 150 bushels an acre, from Commodity Weather Group, to 158 bushels, from Informa Economics, Inc. Earlier this week, broker INTL FCStone said it expects an average yield of 153.2 bushels an acre.
An average yield of 154 bushels an acre, the mid-point of that range, would generate a corn crop of about 13.07 billion bushels, based on USDA acreage forecasts. While that would be the second-biggest crop on record, it would still be down 3 percent from the USDA’s current projection of 13.47 billion bushels, an 8.2-percent jump over 2010’s crop.
The shrinking potential of this year’s crop has become a growing concern for the country’s major corn users, such as livestock feeders, who’ve seen profit evaporate as feed costs soared. Corn averaged nearly $7.03 a bushel so far this summer, up 87 percent from $3.76 last summer, based on CME Group futures.
While corn futures have tumbled from an all-time high near $8 in June, prices recently spiked up again as the Midwest heat wave intensified. In late trading Aug. 5, December corn futures, which reflect expectations for the upcoming harvest, fell 3 ¼ cents to $6.98 ¼. On Aug. 2, the price closed at $7.15 ¾, the highest settlement for a December contract since July 2008.
The heat wave compounded difficulties for many farmers who, because of the wet spring, were unable to plant corn until May or June, past the ideal seeding date. Extreme heat during the day causes corn leaves to curl, limiting the plant’s ability to absorb sunlight, while high night-time temperatures lead to additional problems, hampering the transfer of pollen from the plant’s tassels to the silks, according to agronomists.
click image to zoomDuring a tour of Midwest cropland the first week of August, Doane Advisory Services analysts Marty Foreman and Bill Nelson saw several instances where extreme heat appeared to be hurting development of corn. This photo shows incomplete kernel fill on ears from a field near Dunlap in west-central Iowa Anecdotal reports of such problems have increasingly popped up. During a crop tour of the Midwest, Doane Advisory Services analysts Marty Foreman and Bill Nelson noted “disappointing ear fill” in a corn field near Bloomington, Ill., according to an Aug. 2 Twitter post from the tour.
Corn in central Illinois was “worse than expected,” the analysts said.
Two smaller than average ears with incomplete kernel filling from a field in Tazewell County in Illinois are displayed next to a better-developed ear found by Doane analysts Marty Foreman and Bill Nelson during a crop tour of the Midwest. While the USDA’s Aug. 11 report is widely anticipated in the grain market, the full story of this year’s crop may not be known for several months, some analysts say. Rich Feltes, vice president of research for R.J. O’Brien & Associates in Chicago, said he doubted any production estimates this month will resolve uncertainty over the crop size
“For the near term… U.S. weather extremes to date will undermine trade confidence” in the USDA’s August report, Feltes wrote in reports earlier this week. Agricultural markets are “focused like a laser beam on August weather.”