Corn crop guestimates have the trade scratching its collective head

Is a record corn crop in our near future?

Nevil Speer

August 22, 2016

2 Min Read
Corn crop guestimates have the trade scratching its collective head

The August WASDE (World Agricultural Supply and Demand Estimates) report is always closely watched, especially with respect to corn and soybean production estimates. By August, the crop is far enough along to establish some meaningful projections for the year’s crop production. Therefore, USDA’s August WASDE projection typically serves as the benchmark for the industry’s trade. 

However, there’s always uncertainty at this early stage, relatively speaking.  And therein lies the challenge for the market. The industry has to grapple with accuracy of USDA’s projection in any given year.

This year’s report has attracted lots of discussion, principally about the corn yield estimate of 175 bushels per acre. That’s based on assumptions of 86.6 million acres and if realized, sets a new record. It also, if realized, will make the 2016 corn crop the largest on record at 15.15 billion bushels, exceeding the 2014 crop by 940 million bushels.

national corn yields

Clearly, this year’s yield estimate is significant. Specifically, 175 bushels per acre exceeds the yield trend projection by 10.6 bushels per acre, based on trendline yield at 1.83 bushels per year, and last year’s yield by 6.6 bushels per acre. Moreover, the 175 guess exceeds average trade estimates.

Given those numbers, there is some skepticism surrounding USDA’s recent projections. To that end, traders largely ignored the sizeable overage above trade estimates. And as such, the market largely shrugged off the USDA report.  

So now, the industry is left in somewhat of a tug-of-war between industry guesses and USDA’s projections moving forward. How do you perceive this year’s crop? How does the corn crop look in your area? Where would you guess this year’s crop to end up? Leave your thoughts in the comments section below.

Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.


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About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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