Analysts consider corn yield, market reaction

After last week’s Pro Farmer Midwest Crop Tour, many growers and analysts are increasingly doubtful that USDA’s August estimate of a record national average corn yield will hold.

“Do you think that we have a 175.1 national average on our hands?” U.S. Farm Report host Tyne Morgan asked analyst Peter J. Meyer in Rochester, Minn.

“No, I do not,” replied Meyer, senior director of agricultural commodities at PIRA Energy Group in New York and a crop scout on the Pro Farmer crop tour’s Eastern leg. “I think the numbers are probably between 171 and 172 (bushels per acre).”

Based on crop tour data and other factors, Pro Farmer on Friday estimated an average yield of 170.2 bushels per acre.

That’s nearly 5 bushels below the USDA projection, but the market doesn’t appear to be reacting with higher prices. As of midday on Monday, September corn futures were down 3.5 cents to $3.12 ¾.

“The real question is will  (the lower yield estimates) make a difference in price?” Meyer asked. “I do not  think it will make a difference in price.”

Other crop scouts and market watchers agreed. “It’s not that (the trade) doesn’t care,” said Pro Farmer Editor Brian Grete, who led the tour’s eastern leg. “They just think they are really comfortable with that 171 to 172” bushels per acre yield estimate that the market expects to see this harvest, despite USDA’s high numbers.  

Given all these projections of a bumper, if not quite record crop, analysts and farmers are starting to wonder if the harvest lows might come early in 2016.

“Historically, with big crop years, you put in an early harvest low,” Grete said. “You realize the big crop ahead of time, you make that low, and as prices are dropping, you build that demand base, which encourages you to come out of that early seasonal low.”

Others aren’t quite so sure. “I do not (think we’ve seen a harvest low),” Meyer said. “I think it’s going to be a long drawn-out process here, and I think your banker is going to have something to say about this too, and that scares me to death.”