World Board puts focus on yield, but don't forget harvested acres
USDA cut its corn yield projection 4 bu. to 177.5 bu. per acre, noting “extreme dryness during June.” That seems logical. In fact, we would argue USDA’s trendline yield was around 3 bu. too high anyway. But the World Board doesn’t have a strong history of being correct when it cuts the yield projection prior to the survey-based NASS estimates. Since 1993, there have been five prior times the World Board has cut yields in July. Only the disaster years of 1993 and 2012 resulted in the final yield being lower than the reduced July projection. There are five other years when the World Board cut yields in June. Only 1995 and 2002 resulted in the final yield being lower than the July projection.
That would suggest the final yield could end up higher. But yield is only one component of the production equation. Of the eight years the World Board has cut yield in June or July, final production was higher than the July projection four years and lower four years. Harvested acreage percentage (abandonment) always plays a critical role in determining crop size... but even more so in years like this where weather impacts are exaggerated.
There's still a lot of growing season left and weather has improved for some areas since the end of June, but the World Board's decision to cut its corn yield projection before there is a survey-based estimate from NASS puts an even greater focus on rainfall, temperatures and crop conditions the remainder of the growing season. Expectations are now set that corn yields will be below-trendline.
While much of the focus is on yield, don't forget about harvested acres. The current harvested acreage percentage is a normal 91.7%. It's doubtful that will be higher when harvest is complete... and it could move lower.
Soybean yield projection unchanged
The soybean yield projection was unchanged at 52.0 bu. per acre. While our forecast is currently 1 bu. below that, we don’t have a major argument with the World Board not tinkering with the yield at this early stage — even with the crop stress and widespread reports of extremely short soybeans.
