RPT-COLUMN-Can US corn yield meet ballooning expectations? -Braun

By Karen Braun

NAPERVILLE, Illinois, July 9 (Reuters) - The U.S. corn yield appears on pace to break its six-year streak of undershooting trendline expectations, and some analyst predictions have gotten quite lofty.

But how reasonable are some of these assumptions? What's the true yield potential, and could anything derail the crop from here?

Corn conditions in the top state of Iowa are at a 31-year high for July, and the rest of the Corn Belt is in decent shape. Additionally, near-term weather outlooks remain supportive.

The market has certainly noticed. CBOT December corn futures hit contract lows again on Wednesday, and prices are now chasing five-year lows for the date.

Corn farmers have their sights set on 181 bushels per acre, this year’s trendline yield set by the U.S. Department of Agriculture. Yield has not exceeded this trend since 2018, but at 74% good-to-excellent, current corn crop conditions are the week’s best since 2018.

Iowa’s 86% good-to-excellent stands out, but conditions across other states are solid. Only three key states (Ohio, North Dakota, Michigan) carry below-average corn ratings this week, and those margins are at most a few percentage points.

So what would it look like if the corn crop truly does fire on all cylinders?

SCENARIOS

A national corn yield of 181 bpa requires state-level yields to exceed recent averages. Multiplying USDA’s latest harvested acreage estimates by each state’s five-year-average yield would put the national number at 174.8 bpa.

Above-average assumptions should probably be made at this point, though some analyst estimates have reached into the mid-180s.

National yield would be 189.5 bpa this year if every state matched previous yield records. That specific outcome would never happen, but it sets an upper bound based on previously observed yields.

If the two best yields of the last five years are averaged by state, national yield drops to 184.4. Taking the three best yields of the last five years would result in 181.6 bpa, so this scenario most closely represents USDA’s trendline.

But things are going exceptionally well in Iowa, which accounts for 17% of the U.S. corn crop. Last year, Iowa scored a record 211 bpa, some 3.4% higher than its previous max. Repeating those gains in 2025 would yield 218 bpa, and this makes a huge difference nationally.

Taking the previous scenario that resulted in 181.6 bpa and plugging in 218 for Iowa raises the national yield to 183.5. Yes, Iowa by itself could have a 2-bpa impact on overall yield.

Last year’s national yield record of 179.3 bpa consisted of only six states notching new highs, but Iowa and Illinois were among them. This means that any shortfall in Ohio, North Dakota or elsewhere this year could be more than offset by a banner Iowa harvest.

REPORT EXPECTATIONS

Although not impossible, USDA is unlikely to change its U.S. corn yield estimate on Friday. The last time corn yield increased in July was 2003, though the agency has since altered its methodology.

August, however, could be a doozy.

Big August corn yields have been printed in years where crop conditions were similarly strong to today, including 2016 and 2018. The crop was also doing well in early July 2020, and USDA estimated a whopper yield that August.

The August corn yield, which incorporates farm operator surveys, has a history of coming in heavy. The figure has landed above the average trade estimate in seven of the last 10 years, topping all trade estimates in four of those years.

The August corn yield also has a history of being too high, and that has been the case in seven of the last 10 years. Interestingly, 2016, 2018 and 2020 were among them.

Corn yields tend to disappoint versus late summer expectations if August temperatures, especially those overnight, are too warm. Dry August weather can also clip yields.

The downside to corn yields is shrinking by the day given how well things have gone so far. At this point, it is the upside potential that should be monitored, because that can certainly be capped if the near-perfect weather streak encounters some speed bumps.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

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