Were USDA's Cuts to Corn Too Deep? Get Insights from Pro Farmer Crop Tour

Behind the scenes: How Pro Farmer Crop Tour works
The Pro Farmer Crop Tour begins Monday, Aug. 16. It runs the same 22 routes each year—10 on the western leg and 12 on the eastern leg—to maintain consistency for the Tour. But for a tour like this to work, field selection must be random. Pro Farmer instructs teams of three to four scouts per vehicle to stop every 15 to 20 miles where they can collect a corn and soybean sample. Do they sometimes stop in the same field in back-to-back years? It’s possible, but it’s only by coincidence.

Click here for more information on Pro Farmer’s methodology. 

Weather or not: accounting for weather and pest problems
This year, the major concern for making accurate yield projects will be drought and grasshoppers, with 98% of the West experiencing drought and grasshoppers ravaging fields in both the northern Plains and Midwest. Other weather challenges have been present in previous years, including the flood-damaged fields of 2019 and the drought- and derecho-damaged fields of 2020.

Pro Farmer overcomes these challenges by traveling to a wide array of locations and taking a set of specific measurements that take into account any damaged fields. The 2012 Pro Farmer Crop Tour photo below shows what corn samples can look like as a result of drought. 

So how close do they get with yield projections?
In 2020, Pro Farmer’s corn yield estimate came within 3.2% of the USDA’s Crop Production Summary and soybean projection came within 4.6%. That same year, USDA changed its process for the August Crop Production Report due to budget cuts. They no longer use field observations and now rely on producer survey results and satellite data. Now, Pro Farmer Crop Tour is the only organized group taking measurements in the field.

History shows the August reports can be market-movers
Ahead of USDA's August supply and demand reports, analysts expected little change to yield, but what about demand? "I don't think USDA can make any changes on the 2020/2021 balance sheet until September, or most likely October at the earliest, after the September [quarterly] stocks report," says Jarod Creed of JC Marketing Services. Creed calls the current situation a "dead zone" from a demand perspective, unless China's smaller purchases put on the books this week continue to pick up.

A recent Reuters report added that lagging global export demand for corn and uncertainty around China’s soybean import needs have recently pressured prices. Any reductions on those fronts could offset a possible supply loss if the U.S. harvest comes in smaller. 

Now, here's the curveball from this year's August WASDE report
In response to the 2021 August WASDE report, Ben Brown, Extension economist, University of Missouri, named it one of his top five market movers of the year. The markets confirmed this sentiment when USDA’s August crop production report included a 5 bu. per acre cut to the national corn yield and sent corn futures up more than 20¢ after it was published. On the other hand, as expected, USDA made little adjustment to its national soybean yield and production forecast.

That said, some analysts are questioning the cuts to corn demand. "Typically what happens is when they make a big cut to the supply, like they did in the case of U.S. corn production, they'll make demand cuts," says Joe Vaclavik of Standard Grain. "They cut their projection for U.S. feed usage and also for exports. The export one sticks out to me, because we have a huge book of new crop corn sales." 

"I think, as a result, it probably puts a lot more emphasis on next week's Pro Farmer Crop Tour, and it's not necessarily following the numbers out of each field or each state, but what people are seeing in the field," says Arlan Suderman of StoneX Group. "Are the kernels filling? Are the pods getting big? Are there a lot of pods out there? Are they long pods? That type of thing."

Register for Pro Farmer’s Crop Tour to follow the action August 16-20. Watch the nightly broadcast live at 7 p.m. Central each night to receive daily results, scouting observations and historical comparison data from our tour leaders.