USDA’s 18-state weekly corn and soybean condition reports have been holding steady for several weeks – with roughly three-quarters of both crops rated good/excellent and 7 percent poor/very poor in the 18 states USDA follows.
Virtually all of the nation’s corn crop is at the silking stage or beyond, and three-quarters of the soybeans are pod setting, according to USDA. With the critical yield period fast running its course, many producers wonder: Where will crops go from here?
La Niña conditions have, indeed, developed in the equatorial Pacific, although they have not been around long enough to be officially declared a La Niña. “La Niña-like warmer and dryer influences on our weather are real,” says Jeff Doran, agricultural meteorologist for Planalytics. Click for more on La Niña.
Thankfully, upper-level low pressure has established itself in western Canada and has led to bouts of thunderstorms over the northern Plains and Upper Midwest.
In the week ahead, Doran sees above normal temperatures in the Eastern Corn Belt and Northeast – but he also expects wetter than normal conditions in much of the same area and comments, “soil moisture reserves should ensure no significant issues.” Western Corn Belt temperatures are expected to be more moderate and rainfall, closer to normal, he projects.
Not a Record-Yield Year
Eric Snodgrass, senior atmospheric scientist and co-founder of Agrible, Inc., believes we will see very good yields, but not record U.S. yields in 2016. He shared two sets of graphs to illustrate the major factors. First, consider the Illinois rainfall pattern in 2014, the year that state’s yields exceeded 200 bu./acre. “Notice the stair-step pattern,” he says. Each small step is a rain event. “Then consider the 2012 drought-year pattern: There was a lot of rain in May and some in June. Then a plateau –no rain - in the critical month of July.”
Next, Snodgrass showed the temperature patterns for those two years: In 2014, the average Illinois temperature did not exceed 90˚F during the critical development period. The dotted line on the 2012 chart shows maximum temperatures were over 97˚F many days in July and August and the peak was almost 104˚F. The evening temperatures also were higher than optimal.
This year, it was June that was hot, he notes. “The market reacted and corn prices ran from $3.80 to $4.50. But at that time of year, corn can handle the temperature as long as there is rain.” But the heat wave was short lived and there was plenty of rain in parts of Iowa, Illinois, Indiana and Ohio in the second half of June, which caused the market to collapse. The well-above average stair-step pattern in the graph below of the precipitation in the Quincy, Ill., area bodes well for the crop there.
However, as of this week, some parts of the Eastern Corn Belt were dry. For example, Ohio’s Aug. 7 corn rating fell from 54 percent good/excellent to 47 percent and soybeans fell from 58 percent to 52 percent. Nineteen percent of the corn crop and 15 percent of the bean crop in Ohio were rated poor/very poor.
There also are some reports of corn having fewer rows and kernel development issues such as tip-back in parts of the Corn Belt.
So overall, using weather and crop indicators such as vegetative index to date plus forecasts for weather the remainder of the season, Snodgrass estimates the U.S. corn yield at 167 bu. and soybeans at 48 bu.
Some are estimating higher than that. Bloomberg’s survey came out at an average of 170.6 bu./acre for corn and 47.6 bu./acre for soybeans, while FC Stone released 175 bu. and 48.8 bu.
These compare with USDA’s trendline yields of 168 and 46.7 bu.
Bottom line: It is probably too late for La Niña to significantly impact the U.S. corn or soybean crop. While yields could dip from current estimates, the likelihood is that we are looking at ample crops.
Competition from South American may be another matter: Doran notes that [winter] precipitation in central Brazil and northern Argentina has been well below normal recently. If that continues into September - October, it could have some effect on their plantings and La Niña is known to have adverse effects on crops there.
Crop Insurance is the Key
While the overall outlook looks favorable for yields, some producers may be in a different situation due to local weather factors. Fortunately, when you have the right insurance policy in place, the weather impact (or amount of rain in your gauge...) doesn't matter as much. If your yields suffer, your crop insurance will help close the gap in income.
Just as importantly, it supports earlier marketing. For instance, those who had the confidence to price a portion of their covered bushels on the rally earlier in this season based on typical seasonal price patterns (see “Make the Most of Your Revenue Insurance”) were able to tap December futures prices $1/bu. higher than we’ve seen the past week. November soybeans have made an even bigger move.
“In this portion of the commodity cycle, it is not a good decision to cut costs by reducing coverage,” says Tony Jesina, FCSAmerica senior vice president - related services. “That no only reduces potential indemnities but lowers the number of bushels you can confidently forward price.”
Contact your local FCSAmerica crop insurance office today for a free, no obligation review of your coverage.