Corn Update – August 15, 2017

Dry weather has continued in much of Iowa in the past two weeks, but heat stress has been entirely absent across the central U.S. as temperatures have been well below normal for the time of year; the first two weeks of August were the coolest since 2004 in the central U.S. The abnormally cool weather has been favorable for corn in southern growing areas and in the central Plains, and the most likely U.S. yield has increased slightly to 173.9 bushels per acre (see figure below). The overall improvement in U.S. corn prospects has been tempered by some further deterioration in Iowa, but CropProphet still expects above-trend yield of nearly 188 bushels per acre on average in Iowa. Of the major growing states, only South Dakota is suffering from significant yield shortfalls (see figure below).




The 10 August USDA crop production report provided the USDA’s initial estimates of 2017 state-level yield and production, and the figure below shows the differences between the latest CropProphet yield forecasts and the USDA estimates. CropProphet expects higher yields from the Dakotas to Wisconsin and in Illinois and Indiana, where weather and satellite predictors indicate that prospects are better than would be expected based on surveyed crop condition alone. In contrast, CropProphet’s weather and satellite predictors suggest that corn yields will be significantly lower than the USDA expects in eastern growing areas from Michigan to Tennessee.



The USDA’s national yield and production numbers were revised downward slightly in the August 10 report, but the decrease was much smaller than market consensus expected, and consequently corn futures prices dropped sharply (see figure below). Given that the CropProphet U.S. yield forecast has been higher than the USDA forecast since mid-July, CropProphet users were positioned correctly to take advantage of the market reaction, and indeed CropProphet continues to indicate that the USDA yield outlook is too pessimistic.

The next update to the corn commentary will occur on August 29.