Author: Michael Ferrari, PhD
VP, Applied Technology & Research

Readers of our weekly reports know that, while Weather Trends has been expecting good numbers for US corn production in 2010, our view has not been as optimistic as USDA or most of the other analysts that we follow.  The long range forecast that we developed for the 2010 season was calling for a favorable start (planting through germination), but we did caution that heat stress during mid-crop would serve as a yield inhibitor.  With prices now above 5 (see chart below), some of these concerns that we had voiced are making their way into the market.  The map below highlights the August year-over-year max temperature change (2010 v. 2009), with the primary corn growing regions shaded; this heat (coupled with IA flooding) is now starting to be discussed, and the market is uncertain regarding the directional outlook.



(chart from FinViz).



Beyond our early season forecast which highlighted the potential crop risk, it also is worth noting some of the discussions that we provided our clients with, particularly those from our August newsletters.  Here are a a few samples:

August 2, 2010

“Corn/Soy/Wheat all up strong on Monday morning (+2%, +2% & +4% respectively); weather impacts causing concern both domestically and abroad, with wheat leading most news on the trade wires.  Drought in the FSU is getting most of the attention regarding the wheat spike, while in the US, heat stress may start to become a bigger concern for corn growers.  The US crop did get off to a good start, however we are in the portion of the season where volatility picks up, so there will be an increase in opportunities for weather -event driven strategies to be implemented.event driven strategies to be implemented.”

August 9, 2010

Last week generated some of the highest volatility that was seen in the grains complex in quite some time.  Russian wheat problems continue to cause problems and questions in the futures space, which will be exacerbated by the export ban.  Keeping Russian physicals off of the trade will serve to put a higher premium on supply from US, China and South America.  On the corn and soybean side, the market will only get more pressure from weather this week – as our long range forecast had called for several months ago, in spite of a good start to the season, mid-crop  heat which the Midwest is currently experiencing will lead to heat stress issues, putting a big question mark around final production and yield estimates.”

August 23, 2010

“USDA released their corn & soybean estimates last week.  For corn, their yield estimate for the US crop is 165 bu/acre, and their soybean estimate is for yields to come in at 44 bu/acre.  For comparison, the ProFarmerCrop Tour results were also released, and they are putting the 2010 corn yields at 164.1 bu/acre, and soybean yields at 44.9 bu/acre.  The Weather Trends estimate is lower, in large part due to our models figuring in higher susceptibility to heat stress which came in around mid-crop, with more of an impact to corm.  Our current numbers are around 163.2 – 163.8 bu/acre for corn yields, and the soybean yield projection is 42.75 – 43.25 bu/acre.”


As of September 22, our most recent estimate for US corn is between 162.9 and 163.1 bu/acre.


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