Uncertainty About 2016 U.S. Average Corn and Soybean Yields Persists07/15/2016
Expectations about the likely U.S. average corn and soybean yields at any point in the growing season are influenced by a number of factors. These include the trend in historical average yields, the timeliness of planting in the current year, weather conditions to date in the current year, and weather forecasts for the remainder of growing season. In addition, the USDA’s weekly ratings of crop conditions (percent of the acreage rated very poor, poor, fair, good, and excellent) reported in the Crop Progress report quantify the current overall health of the crop and are widely used to form expectations about yield potential (e.g., farmdoc daily, July 19, 2011; August 4, 2011; September 9, 2011; Lehecka, 2014). In particular, the combined percentage of the crop rated good (yield prospects are normal) and excellent (yield prospects are above normal) at any point in the growing season is commonly used to quantify average yield expectations. Condition ratings for corn and soybeans so far in 2016 have been at historically high levels and this has been an important factor in moving yield expectations higher and prices lower. What has received less attention is the question of how well condition ratings at this point in the growing season correlate with final U.S. average yields. Put differently, what degree of uncertainty should be attached to yield forecasts based on the present high crop conditions? We investigate this issue in today’s article for current crop condition ratings as well as those during the remainder of the summer.