Reuters – Despite a late start, the U.S. corn crop began the growing season in strong health, though that has since declined after several weeks of dry and sometimes hot weather.
That does not necessarily mean analysts need to make drastic cuts to yield assumptions, though they might consider that if rains don’t arrive.
The U.S. Department of Agriculture’s statistics service on July 5 pegged 64 per cent of the corn crop as having good or excellent health as of July 3, down from 67 per cent the previous week and below the trade prediction of 65 per cent.
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That’s a decline of nine percentage points since the initial score four weeks earlier. Similarly quick downturns in corn conditions are rare this early, though one happened during the same weeks in 2021, making it only the third instance in nearly three decades (2012 and 1998 were the others).
Last year, corn yield was dragged down by historic drought in the Dakotas and northwest Minnesota, though a new national record of 177 bushels per acre was eventually realized as top-producing states like Iowa, Nebraska, Indiana and Ohio hit new highs.
That was below USDA’s initial 2021 trend of 179.5 bu./acre and it was not above a separately calculated longer-term trend, so it was considered an average crop in context. USDA’s 2022 trend of 177 bushels would also be a decent though not excellent crop, and it is still in the cards.
Crop conditions are not great at quantitative yield predictions, but they do well at the extremes. The lowest conditions produced the worst yields and vice versa. The middle is a gray area, but this year’s ratings, in the lower half of mid-range, do not precede stellar corn crops.
However, average crops have frequently resulted when ratings have declined into July and when condition scores are in the low-to-mid-60s.
It should not be shocking if corn conditions do not improve. Good-to-excellent conditions during July have risen by at least two percentage points in only four of the last 30 years, most recently in 2008.
Improvement is even less likely if the driest areas of the Corn Belt, which have driven the cuts in ratings, do not receive moisture soon. Scattered storms were forecast for most areas as I write on July 5, potentially bringing rain to parched areas including the eastern belt and mid-south.
From the initial early June ratings, corn in Indiana has fallen 28 percentage points, Illinois 16 points, Kentucky 50 points and Ohio 21 points. Iowa is down nine points but up 15 from the same date last year.
– Karen Braun is a market analyst for Reuters. Views expressed above are her own.
