Hello Pro Farmer Members!
USDA's initial crop condition ratings showed the corn crop is off to a strong start, as expected, with 76% rated "good" to "excellent." As a result, some analysts are already starting to push their national average yield projections higher. That got me wondering whether there's a direct correlation between initial crop ratings and final corn yields. My initial thought was no, but you never know for sure unless you fully study the numbers. So, with the help of Sr. Market Analyst Rich Posson, we did just that. Not surprisingly, there is very low correlation between how the crop starts the growing season and how final yields end up -- only 19.4% to be exact. You only need to go back two years to the 2012 growing season for proof. The crop started even stronger than this year in 2012, but the national average yield plunged to 123.4 bu. per acre as the historic drought tightened its grip through the growing season. Our study results showed there's greater correlation if you look at crop ratings in mid-July (pollination), the third week of August (grain fill) and at the end of the growing season. But even then, the results aren't that strong.
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So we took it a step further. We then looked at how crop ratings compared to the prior year, the prior two years and the prior three years equated to final yields. There was a big jump, with strong correlations around pollination, grain fill and the end of the growing season. When considering the year-over-year change in crop conditions from pollination to the end of the growing season, it gives us a much better idea of how the crop will yield that year. There still isn't a 100% correlation, but this gives us a much better idea of how to "equate" USDA's crop ratings to yield as we move through the growing season.
A strong start to the growing season doesn't hurt, but it also doesn't guarantee a record yield when all is said and done. There's a lot of growing season ahead. And weather from here forward will have a major say in how the crop yields.
Pro Farmer Editor Brian Grete discusses what's in this week's newsletter:
Speaking of weather, forecast models continue to point toward El Nino being officially established this summer. El Ninos don't guarantee favorable weather for the Corn Belt, but they do reduce the odds of unfavorable weather. It's the combination of a strong start to the growing season and the likelihood of El Nino developing that has analysts and traders expecting a bumper crop this year.
The ingredients for a there for a record national average corn yield and production, but there's still a lot of growing season left and conditions sometimes change quickly.
For more details on our study between crop condition ratings and final corn yield, be sure to read News page 4 of this week's Pro Farmer newsletter.
That's it for now...
... have a great weekend!
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