... about the many questions surrounding next week's special update to the 2009 corn crop estimate. While most admit they were at least somewhat surprised by January's jump to 165.2 bu. per acre for USDA's national average corn yield estimate, many also believe USDA's March update will also hold plenty of surprises.
AT ISSUE -- Test Weight: There is still a general belief in many areas of the Midwest that USDA's National Ag Statistics Service (NASS) somehow failed to catch on to the fact that the 2009 corn crop weighed light. For sometime now, we've been working with a national average test weight "assumption" of 54.5 pounds. I call it an "assumption" because very few have the ability or network to accurately estimate a national average test weight... we're just assuming that, "on average," test weights are down about 1.5 lbs. from normal. In reality, as more corn starts to come out of the bin, I'm starting to think the 54.5-lb. test weight assumption might be a little optimistic -- it could be below that.
However -- when USDA's NASS did its survey work for the January Annual Production Summary, it asked for actual yields taken from scale tickets -- therefore adjusted for test weight and other factors. So -- most of the survey respondents should have factored that into reported yields... which means USDA should have recognized (and factored in) the test weight issue.
AT ISSUE -- Moisture Levels: Everybody harvested a lot of wet corn last fall (and some are still harvesting wet corn right now!). The bottleneck at the dryer (on-farm and in-town) is one of the reasons many growers saw harvest stretch past Thanksgiving 2009. There are some that believe USDA failed to account for higher-than-normal moisture levels in the 2009 crop and when they adjust yields to account for higher-than-normal moisture levels in the special March update next week, it will pull the national average yield down. You know what the adjustment is -- 1.8% of shrink for every point of moisture above 15.5%.
However -- as talked about above... NASS asks for actual yield. That means a yield adjusted for test weight and moisture levels. So -- most of the survey respondents should have factored that into their reported yield... which means USDA should have recognized (and factored in) the high-moisture issue.
AT ISSUE -- Unharvested Corn: One of the reasons USDA said it would resurvey for a special March update is because of the amount of unharvested corn in some states. In fact, the "new data" NASS collects for the survey will come from states that had a significant amount of corn still in the field when data was collected for the January Annual Production Summary. Since many growers successfully harvested corn from the middle of December through the middle of February, USDA will have some fresh data to work with -- but not a lot. There was a huge amount of corn unharvested in the middle of December -- compared to normal. But, there was a small amount of corn unharvested in the middle of December -- compared to the total number of acres that were harvested.
We want to get the "right" number from USDA as much as anybody... but as of December 13, you guys had harvested 92% of the corn crop. So, we will get fresh data on about 8% of the crop -- and some of that "fresh data" will be that the corn is still in the field. But... there will be fresh actual harvest results on some of those acres.
To avoid any argument about how much corn is still in the field, in this "thought process," let's just assume (I know... that's dangerous) it has all been harvested. Let's also assume the average yield on those acres was going to be 165.2 bu. per acre. Now... let's also assume those acres saw a 10% yield loss from the middle of December (when the yield was 165.2 bu. per acre) until it was harvested. That means we've got 92% of the acres at 165.2 bu. per acre (good for a 151.98 bu. contribution to yield -- that's just 92% of 165.2) and 8% of the acres at 148.68 (90% of 165.2) bu. per acre (good for an 11.89 bu. contribution to yield -- 8% of 148.68). Add those two yield contributions together (151.98 + 11.89) and you get a national average yield of 163.87 bu. per acre. That's a 1.33-bu. drop from the January Annual Production Summary national average corn yield -- a 0.8% decline.
Impact on total production: USDA also put total harvested corn acres in 2009 at 79.63 million acres. At a national average yield of 163.87 bu. per acre, that would equal a crop of 13.049 billion bu. -- down 109 million bu. from USDA's January estimate of 13.151 billion bushels.
AT ISSUE -- Market Impact: Exactly... how much market impact could we expect from a 100-million-bu. cut to the 2009 U.S. corn crop? I'm not saying there wouldn't be any impact, but the price-positive impact from a 100-million-bu. cut to the U.S. corn crop at this time would NOT likely equal the price-negative impact we saw when USDA added 230 million bu. to the crop estimate in January.
BOTTOM LINE -- A "big" move in the national average corn yield from the current estimate of 165.2 bu. per acre isn't likely. Obviously, the biggest "surprise" would be if USDA's NASS somehow finds evidence to support a national average yield above 165.2 bu. per acre. The second biggest surprise would likely be a steady estimate and many corn bulls would be disappointed if USDA doesn't drop the national average yield by at least 1 bu. per acre.
To erase the 230-million-bu. gain USDA pinned on the corn crop in January, the national average yield would have to drop to 162.3 bu. per acre. That's unlikely, because USDA estimated the national average yield at 162.9 bu. per acre in November -- and then added about 335,000 acres to the harvested acreage tally in the January Annual Production Summary. So -- erasing the entire 230-million-bu. "January jump" seems very unlikely.