What is in this article?:
- Texas A&M Economist Mark Welch says there's still some bullishness left in the U.S. corn market.
- Worldwide per capita corn use continues to grower, more than other grains.
- There's still good incentive for U.S. growers to plant corn in 2014.
JUDGING FROM world per-capita consumption, it’s a good time to be a grain farmer
U.S. crop condition shows improvement
The corn crop condition is much better in the U.S. this year compared with last year when three was severe drought in the Midwest, says Welch. In late September, 45 percent of the nation’s crop was in good to excellent condition.
“Looking at the average crop condition index, our crop was in a little better shape as we got into July. It wasn’t until late August/early September that we saw those conditions slip and then quickly rebound, which is a common occurrence. It looks like USDA’s estimate of 155 bushels per acre is doable. Trend line yields give us an average of 157, so it looks like we’re on track to reach that number.”
FSA is reporting higher prevented plantings, higher abandonment, and a much lower harvested number than NASS is projecting, says Welch. With corn, we’re seeing the average yield estimate tick up. The early yields coming in from the Midwest were much better than expected.”
The University of Illinois, he says, estimates that 8 percent of the U.S. corn crop is grown outside the farm program. So the FSA numbers would account for 92 percent of planted corn acres.
“The trend line projects a yield of 157 this year and 159 bushels in 2014. Can we maintain that rate of growth as we expand our corn-growing areas? There are some definite concerns about that.”
The drought in 2012 dropped corn yields 21 percent below trend, says Welch, whereas in 1988, with a drought of similar magnitude, yields dropped about 25 percent below trend.
“Even if we can maintain that projection of yield growth, the average amount we were above trend from 1980 to 1995 was 8 percent. The average amount we were over trend was 14 percent. From 1996 to 2010, the average above was 3 percent up and 3 percent down. The last 16 years, prior to 2012 was a period of relative stable production in terms of average yields.”
This year’s projected yield of 155 bushels per acre is “just a hair” below trend, says Welch. “This would give us a 13.8-billion bushel crop. That’s holding harvested acres at 8.9 million and yield at 155. Of course that’s an all-time record high corn crop. We could give up a lot of bushels and still have a record corn crop.”