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Corn Crop Faces a Weather Threat – 2017.07.07

This article appeared in the July 7th issue of our Weekly Market Letter. Take a free trial today. 

When looking back to the 2016 growing season, one that produced a record corn yield of 174.6 bushels per acre, it’s hard to recall a stretch in which the entire Corn Belt did not get a decent rain event. Corn crops in the heart of the belt in Illinois, Iowa and Indiana were chest-high and pollinating on schedule in late June and early July last year. This year producers in Illinois and Iowa are commenting on how short their corn is as pollination begins. 2017 has been a much more difficult growing season to say the least.

First, there were excessive rains in southern Illinois, southern Indiana and in Missouri and Arkansas in the spring, which caused massive re-planting issues. Much of the replanted corn will not be pollinating until late July, possibly into some of the warmest temperatures of the season.

Second is the continued expansion of the “flash drought” in the Dakotas. It has expanded west into Montana and Colorado, and it could slide east into Nebraska, Minnesota, western Iowa and Kansas next week. The Dakotas alone planted 8.9 million corn acres this year, 9.7% of the corn planted area for the nation. Last year, North and South Dakota produced 1.2 billion bushels of corn, almost 8% of the total US crop.

Third, the recent European forecasting models has the ridge of heat centered over the Dakotas and sliding east for July 12-16. Oppressive heat is forecast with limited chances of rainfall in South Dakota, North Dakota, Nebraska and Minnesota. An expansion of the ridge of heat into the western half of the Corn Belt during pollination could be inflammatory for prices to say the least.

When comparing this year’s good/excellent (G/EX) ratings in the top ten producing states versus last year, nine states are rated lower. The only one that is rated higher is Minnesota, which is rated 80% G/EX versus 79% last year. In the two largest producing states (Illinois and Iowa, which together account for 27% of the total corn planted area), Illinois is down 7% G/EX from last year and Iowa down 1% from last year. Illinois looks to be heading to a slightly lower than trend yield at 175 bushels per acre versus 197 last year and the ten year trend at 179. Iowa’s current rating points to slightly higher than the ten-year trend yield of 185, unless we see the heat turn up next week. As of today we would use a 190-bushel yield for Iowa, versus last year’s 203-bushel yield.

Of the nine states that are rated lower than last year, the five worst are Indiana, which is down 26% G/EX, South Dakota, down 26%, North Dakota, down 23%, Wisconsin, down 14%, and Ohio, down 14%. These five states account for 21.95 million acres or 24% of the total planted area. Using the ratings from this week compared to last year’s yield, we would estimate the following five states’ yields at this way: Indiana 155 bushels per acre versus 173 last year and 163 ten year trend, South Dakota 125 versus 161 last year and 158 ten year trend, North Dakota 110 versus 137 last year and 136 ten year trend, Wisconsin 158 versus 178 last year and 165 ten year trend, Ohio 148 versus 159 last year and 161 ten year trend.

The other three states in our analysis are Nebraska, Kansas and Wisconsin, and all three could be heading for some heat over the next ten days. Nebraska is rated 75% G/EX versus 80% last year, Kansas 63% versus 67% and Minnesota 80% versus 79%. Nebraska yield is estimated at 173 versus 178 last year and a 179 ten year trend; Kansas is estimated at 137 versus 142 last year and 137 ten year trend; and Minnesota is estimated at 181 versus 193 last year and 181 ten year trend.

These ten states account for 77% of the entire planted area and would produce 11.444 billion bushels using our yield estimates. This would amount to a decline of 450 million bushels in production from ten year trend yields and decline of almost 900 million bushels from last year’s production for these states.

This yield analysis is using this past Monday’s ratings. If the ridge shifts east into the western Corn Belt, things could get much worse.

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