The jury is out whether we’ll produce a record corn crop, despite the probability of high yields
USDA this month lowered its estimate for planted corn acres. But Jerry Gulke, president of the Gulke Group, doesn’t think government forecasters have reached low enough.
"It is doubtful that 91.6 million acres estimate is correct," says Gulke, basing his assumptions off recent conversations with farmers. "We have few if any clients in North Dakota and Minnesota that actually planted their intended corn acres. Ditto for Michigan and Wisconsin."
One problem is that information for USDA’s June 30th acres report was gathered during the first two weeks of June. Moreover, the report revisited planting intentions made during the first two weeks of March. Gulke questions whether record rainfall north of I-90 and in the Northeast after the survey was taken changed how much corn was actually planted.
USDA’s data show that farmers in Illinois and Iowa planned to plant 400,000 fewer corn acres, even though they didn’t have to grapple with intense rain. Also, farmers in North Dakota, despite wet planting conditions, reported an increase in planting intentions.
"I doubt it!" Gulke says.
The broker is looking forward to USDA’s August 12th report, which will include the first survey based on actual yield observations, including failed acres.
Despite these question markets, given the downward direction of corn and soybean prices during the week, the market seems to be bracing for record corn and soybean production. Gulke says the general belief is that the corn crop is so good south of I-90 that it will make up for any losses incurred up north.
"We’re seeing some estimates of upwards of 300 bu. per acre corn, where they only got 240 before," he says.
Gulke’s assumptions are shared by many other analysts who also believe USDA has underestimated average corn yields. Darrell Good of the University of Illinois wrote this week that the market already seems to be factoring in an average yield of 170 bushels per acre, rather than the USDA’s official forecast of 165.3 bushels per acre.
That yield, when multiplied on USDA’s projected harvest of 83.8 million acres, produces 14.25 billion bushels, a record harvest. That’s 390 million more bushels more than USDA’s current projection.