Rain Washes Away Potential For Trendline Corn Yields

“But the moment you go to less than 73% planted on May 20, that's when we start to see statistical departure from that high probability of still having a trend line yield.”
As farmers fight Mother Nature for a chance to get in the field, some market analysts say the May 20 crop progress report from USDA will show the potential for trendline corn yields this year is now gone. 

USDA has a set reporting schedule for Crop Progress reports and each year it tracks certain weeks. This year’s May 20 report date aligns perfectly with the May 20 dates of previous years, according to Mike North of Commodity Risk Management. 

“On that date, 83% of the corn crop is typically planted--that's normal,” North explained to AgDay host Clinton Griffiths. “Now, we've seen departure from normal in different years, even last year, where we were less than 83%, so the big question everybody has is, ‘OK, if we don't get that 83% on May 20, what does that mean?”

The data suggests having 73% of the corn planted by May 20 does not really change the outcome of yield, North said. 

“You can see years with lower yields, you can see years with higher yields, but there's no strong correlation, if you're less than 10%, behind the normal curve,” he said. “But the moment you go to less than 73% planted on May 20, that's when we start to see statistical departure from that high probability of still having a trend line yield.”

Unfortunately, its highly unlikely farmers reached the 73% mark over the past week. On May 13, the corn crop was just 30% planted. 

“I would say next to impossible,” North said.

Arlan Suderman of INTL FCStone said USDA could confirm 40 to 45 million corn acres are still unplanted, as of today’s report. 

“A wet forecast [is] providing little optimism on when a typical week of open planting to get it done will come,” he said. 

How Far Below Trendline?

Summer weather plays a big part in the trendline discussion, according to North. 

“As we've learned in previous years, it's not all about how we plant the crop. It's how the crop moves through the growing season and arrives at harvest,” he said. “The next thing to really watch is what kind of summer weather do we get if we maintain kind of a milder, cooler forecast, which is pretty typical of an El Nino year, which they're telling us we're supposed to get, then it may not be as big of a deal.”

However, if summer becomes hot and dry and stresses this crop, that could be a problem, he said. 

Will this mean a bump in prevent plant acres? Not necessarily. 

“The final days of May and the early days of June are when farmers make that decision on whether to plant [corn], switch to soybeans or collect on prevent plant insurance benefits,” Suderman said. “Their default is to plant if the weather provides the opportunity. I’ve never seen a year like this in my six decades of being around agriculture. If the forecast verifies, this year could prove historic.”

Still, North thinks farmers will push to get corn planted. 

“I think guys are going to fight to get their corn in the ground, because they see what the market now might be capable of,” he said. “They're going to want to plant that corn and I think that if you can, it's still the right choice. But if it just goes so far that you know that you're going to be severely compromised in yield, you probably still want to make a push towards soybeans.”

The potential for a Market Facilitation Program 2.0 makes the decision to opt for prevent plant right away more difficult, North said.

“[If they duplicate] the payments we saw in soybeans last year of $1.65, you have to have a crop to be able to get the check,” he said. “So, prevent plant is not even an option if you intend to participate in that. If I can move [corn acres to] soybeans and get that planted and raise enough of a yield to get the $1.65, my bean acres could be profitable.”

At the end of the day it’s going to be juggling act between corn and soybeans the next few months, North adds. 

“Should I go corn? Should I go beans? There really is no perfect, universal answer,” he said. “Everybody's ground is different, cost structures are different, debt structures are different. They're going to have to make that decision though, I'm afraid, in many a field across the Midwest.”

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