SIOUX FALLS, S.D. (Reuters) - Many agriculture market watchers were perplexed by the larger-than-expected U.S. corn and soybean yields forecast by the Department of Agriculture on Aug. 12, and some of those folks this week will have a chance to get out into the fields to inspect for themselves.
U.S. corn was sown at a record-slow pace this spring and soybean planting was close to record slow, so the crops remain developmentally behind schedule. This, along with some pockets of questionable weather across the Midwest, is a big reason why USDA’s 169.5 bushel-per-acre (bpa) corn yield forecast does not sit well with some market participants.
USDA placed soybean yield at 48.5 bpa, and both the agency’s corn and soybean yields would be the lowest since 2015 if realized. The 27th annual Pro Farmer Midwest Crop Tour may provide more clarity to the market on whether this is the likely scenario.
Starting Monday, nearly 100 agriculture industry participants will take part in the Midwest Crop Tour, one of the most widely followed crop tours in the world due to its size and history. Tour scouts this week will take measurements in hundreds of corn and soybean fields across the key U.S. states of Illinois, Iowa, Nebraska, Minnesota, Indiana, Ohio, and South Dakota.
The Tour findings help determine the year-to-year trend in the corn and soybean crops and are most meaningful when compared with past Tour data, not the government data. Market participants should keep this in mind as the numbers roll in throughout the week.
Anyone interested in the tour can follow the Twitter hashtag #pftour19 throughout the day from Monday through Thursday as many scouts tweet in real-time from the fields. Mid-day and nightly updates will also be available from Reuters.
In each corn field, scouts measure row spacing, count ear populations, measure grain length on three systematically selected ears, and measure the number of kernel rows around the ears. These metrics allow for a rough yield calculation, which essentially assumes a standard ear weight for all fields.
Tour calculations for corn work best with more mature ears since it is obvious where grain has filled and where it has not. But immature corn will certainly be a challenge this year, especially on the Eastern routes where corn was planted very late.
It is hard to derive soybean yields from field measurements at this stage because there are too many unknown variables such as the number of pods per plant, the number of beans per pod, and the size of the bean in the pod.
The Tour does not estimate soybean yields in each field on a bushels-per-acre basis, but instead the number of pods in a three-foot by three-foot plot. These pod counts are indicative of how much of the bean production factory is up and running, with higher counts being more supportive of higher yields.
TOUR VERSUS ITSELF, USDA
Last year, the average yields of corn samples ranged from 178 bpa in South Dakota to 193 bpa in Illinois, indicative of a strong, consistent crop. But USDA’s forecast suggests the lowest national yield since 2015, so it may be more informative to compare Tour data with that year, with the caveat that the planting situation was completely different.
In 2015, weather conditions were challenging in the Eastern Corn Belt. That year, the Tour found 143 bpa in Indiana, 148 bpa in Ohio, and 172 bpa in Illinois. The Western Belt was much stronger with 180 bpa in Iowa, 191 bpa in Minnesota, 165 bpa in Nebraska, and 166 bpa in South Dakota.
It is helpful to put a floor on soybean pod counts, especially since many market participants fear that the extremely late planting will not facilitate enough pod development. The widespread drought year of 2012 yielded 1,000 pods in Iowa, roughly 940 in Illinois and Minnesota, about 900 in Nebraska, just under 600 in South Dakota, and 1,033 in Indiana and Ohio.
National yield of 49.3 bpa in 2017 was not as strong as in 2016 or 2018, but it is somewhat close to USDA’s forecast for this year. Pod counts in 2017 were 1,230 in Illinois, around 1,100 in Iowa and Ohio, 1,170 in Indiana, 1,020 in Minnesota, 1,130 in Nebraska, and 900 in South Dakota.
Some of the Tour’s state corn yield averages reported at the end of the day will be noticeably off from USDA’s numbers. In Nebraska, Minnesota, and South Dakota, deviations between Tour and USDA final yields are caused by geographical variance.
Since 2001, approximately 15.4 bpa on average must be added to the Tour’s state corn yield in Nebraska. This is because more than half of the state’s corn is irrigated, but more than half of the Tour’s samples are on dry land.
Some 8.7 bpa must be subtracted from the Tour’s Minnesota yield because the routes mostly cover the higher-yielding southern tier. In South Dakota, the Tour’s corn yield comes in 4.7 bpa too high on average since 2001 because the routes also feature more of the better farmland in the state.
In Illinois, Iowa, Indiana, and Ohio, smaller variations arise based on how the crop finishes out. Since 2001, Tour results usually need an addition of 2 bpa in Illinois, 5.1 bpa in Iowa, 2.6 bpa in Indiana, and 3.2 bpa in Ohio.
Pro Farmer, which is the news and marketing wing of Farm Journal, will release its estimates of U.S. crop production on Friday, drawing from data collected on the Tour and other sources. Last year, Pro Farmer snapped its long streak of underestimating both corn and soybean yields.
In August 2018, Pro Farmer pegged the U.S. soybean yield at 53 bushels per acre, but the final came in at 51.6 bpa. That was the first time since 2010 that Pro Farmer’s post-Tour bean yield was ultimately too high. The most drastic miss in recent years was in 2012 when Pro Farmer was 5.2 bushels too low.
The group also placed corn yield at 177.3 bpa last year, higher than the final of 176.4 bpa, and that was the first time since 2011 that Pro Farmer overestimated corn yield. The largest recent miss was in 2017 when Pro Farmer’s number was 7.1 bpa below the final.
The opinions expressed here are those of the author, a market analyst for Reuters.
Editing by Marguerita Choy
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