South central kansas | eastndfarmer - 1/30/2024 06:59
Where do you think corn prices bottom before planting?
I say $4.30
If US produces another 175 ish crop then where do they go? Assuming no changes to other countries or world events.
I say $2.85
How High is High for the U.S. Average Corn Yield?
JANUARY 22, 2024 0 COMMENTS
It won’t be long until we start thinking seriously about corn yields for the U.S. in 2024. I know there are already some concerns out there because of dry conditions in Iowa and parts of the western Corn Belt. I also had dinner with a couple of other market analysts last week and our conversation sparked a question about high corn yields not low. This is just my personal opinion, but I sense that some may be underestimating how high yields could go based on a relatively flat pattern in recent years.
I think the chart below is a reasonable way to interpret the history of U.S. average corn yields since 1980. The middle solid line is a standard linear trend line with a slope just under two bushels per year. I know some will argue for a higher or lower slope, but I think this is realistic until clearly proven wrong, and that will take some time (I lean towards higher in the future if you want to know my bias). The dashed lines are my main focus. I want to know what the “trend” looks like for really big corn yields. It’s subjective, but a +10bpa trend deviation seems to fit that definition pretty well. Since 1980, there have been eight years with a trend deviation of +10bpa or more, and the list of years is familiar: 1981, 1982, 1985, 1986, 1992, 1994, 2004, and 2009. If you are curious, 2014 just missed the cutoff. Historically, there has been 8/44=18% of the years with these super high yields occurring. In other words, roughly a 1 out 5 chance. Since the distribution of trend deviations is not symmetrical, there are fewer years that meet the -10bpa cutoff, and they are once again familiar: 1983, 1988, 1993, 1995, and 2012. The chance for these super low years is rough 1 out of 10.
So, what does this all mean for 2024? Let’s start with the trend yield, which is 181.3 bpa using this regression trend line. That seems pretty reasonable to me, and I think it will be within a bushel of two of the vast majority of estimates you will see out there. Here is the real kicker: 181.3 + 10 = 191.3 bpa. I know that probably seems unimaginably high to many, but interpreting the data this way says there is about a 1 in 5 chance of a U.S. average corn yield this high (or even higher). My guess is that most people are not even considering the possibility that the U.S. average corn yield could be this high in 2024. Of course, there is also a 1 in 10 chance of the corn yield being 171.3 bpa or lower.
I want to be completely clear that I am not projecting a U.S. average corn yield in 2024 of 190 bpa. Since I don’t believe there is much if any correlation between winter weather and the following growing season weather, my expectation using this model would be a trend corn yield of 181.3 bpa for 2024. At the same time, the data tell me there is a decent chance (1/5) that the final 2024 yield could surpass 190 bpa (gulp).
Laurence J. Norton Chair of Agricultural Marketing
University of Illinois at Urbana-Champaign
Edited by zenfarm 1/30/2024 07:57
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