Final corn yield numbers will depend on August weather

By Holly Jessen | August 11, 2011

The remaining weeks in August will have a big impact on actual yield numbers for the 2011 corn crop. “It appears it’s not whether it will be below trend, it will be how much below trend,” says Darrel Good, a professor with the department of Agricultural and Consumer Economics at the University of Illinois at Urbana-Champaign.

The latest projected yield numbers from the Aug. 11 World Agriculture Supply and Demand Estimates Report back that up. Thanks to unusually high temperatures and below average precipitation in July, the USDA now forecasts yield of 153 bushels per acre.

U.S. corn farmers are still on track to produce the third largest crop on record despite difficult growing conditions that have plagued much of the Corn Belt since planting, said the National Corn Growers Association. Projected at 12.9 billion bushels, the total 2011 U.S. corn crop will only be 1.3 percent, or 177 million bushels, below the record set in 2009.

Still, it’s not good timing for the U.S. corn crop. Supply was tight in 2010 as well and lowered yields this year will mean the industry won’t be able to begin rebuilding inventories. “The common wisdom is that it’s going to take two or three consecutive crops to do that and it appears we are not going to get a start to do that this year,” Good said. “So we’re just going to kick the can down the road.”

If corn yields stay up in the 155 to 156 bushels range, it’s won’t be much of a problem, Good told EPM. “We won’t really have to do much rationing but it wouldn’t give us much downside on the price,” he said. On the other hand, if yields dip down to 150 bushels some sector or combination of sectors will have to reduce corn consumption. “The question is, ‘What kind of price does it take to do that and who would be the first to reduce consumption?’ he asked. “The answer then would be, ‘It depends.’”

If rationing happens Good expects it will likely be in the livestock or ethanol industries, or a combination of the two. Livestock prices will determine how much ranchers can pay for corn. On the ethanol side, crude oil and gasoline prices are the determining factor. “We’re hopeful at this point it won’t get to that, but we have had some pretty severe weather, that’s for sure,” he said.

In Illinois the data shows that July 2011 was tied with 1983 as the warmest since 1975. Looking back at the five worse years in history the worst of those was in 1983 and the so-called best of the worst was 1977. “I don’t think we are in a 1977 scenario,” he said. “The question is, ‘Do we have some significant areas where they are going to have the same kind of yield response as they did in 1983?’”

On Aug. 8 USDA Secretary Tom Vilsack pledged to work with the nation’s farmers, ranchers and rural communities to help those affected by extreme weather, including floods, drought, fires and tornadoes. Disaster designations have been issued for 547 counties in 30 states. So far, producers have received $693 million in indemnity payments to help recover from disasters, including more than $520 million to those affected by drought and $88 million to those affected by flooding. “America’s farmers and rural communities are vitally important to our nation’s economy and our values, and my heart goes out to all who are facing hardships because of severe weather and natural disasters,” he said.

Poor and very poor conditions are concentrated in Texas, Kansas and North Carolina due to drought and extremely high temperatures. The USDA crop progress report released Aug. 8 by the National Agricultural Statistics Service Agricultural Statistics Board showed that of the corn conditions in 18 states tracked by the USDA, corn quality was down in 14 states when compared to last year, Anthony Prillaman, an agricultural statistician with NASS told EPM.

Conditions in some states aren’t looking so bad, however. A total of 58 percent of the corn crops in Nebraska and South Dakota are rated good. In North Dakota, 57 percent of the crop is rated good. In Wisconsin, 52 percent of the corn crop is good while 27 percent is rated excellent. Following that state’s numbers are Iowa and Michigan, in which 22 percent of the corn crop is rated excellent. A total of 51 percent of Iowa’s crop is good while 43 percent of Michigan’s crop is good.

In Kansas, Western Plains Energy LLC board member Brian Baalman told EPM that the corn crop near that plant, in the northwest corner of Kansas, looks good. “I’ve got good looking dry land corn,” said the corn producer and past president of the Kansas Corn Growers Association. However, 20 miles away there’s drought.