2020 Yield Expectations On the Rise and Weather Outlooks
Update for August 6th, 2020
High-level talks between U.S. Trade Representative Bob Lighthizer and his Chinese counterpart Vice Premier Liu He will be held on or around August 15th. There has been a great deal of uncertainty whether the meeting to assess the progress of the Phase 1 agreement would take place due to current tensions between the two countries. But according to the Wall Street Journal the two will meet via videoconference and will likely focus talks on China’s commitment for purchases of U.S. ag, energy and manufactured products as well as recent restrictions placed on Chinese tech companies by the U.S.
There is still no agreement on what the new coronavirus relief package will look like. Congress is working around the clock in an effort to come to an agreement before the end of the week. Several farm groups are working for a massive new round of money for agriculture in this new relief package even though billions of dollars have gone unclaimed in an ongoing USDA program. Mike Stanz VP of the National Farmers Union and Terri Moore VP of the American Farm Bureau agree that the unexpectedly slow rate of coronavirus payments from the USDA’s $16 billion fund is not an indication that the resources are not needed but instead are a poor gauge of the conditions in farm country. Stanz explained, “There’s ample reason I believe that family farmers and ranchers will need additional support in the coming months to withstand the financial impacts of the pandemic”. Moore added, “We believe a combination of factors are contributing to the unallocated dollars – lack of need is not one of them”. Both Stanz and Moore are concerned that “quirks and glitches” in the CFAP may be limiting the programs reach. (Ag Insider)
U.S. biofuel and ethanol producers are also anxiously awaiting final details of the aid package. Unfortunately, according to one congressional observer: “Right now it’s a dead issue. It could be resuscitated. Senate Republican leadership points to processing language in direct $20 billion in aid in the Senate proposal as the necessary authority for biofuels to go argue for it before the ag secretary. As we know, I don’t think that’s necessarily convincing to Secretary Perdue. It’s by no means a forgone conclusion.” Another congressional observer added, “USDA seemed disinclined to provide assistance unless specifically directed to…pointing to “processing” isn’t going to get it done”.
Corn prices have rallied a few times this season but since the high in early July prices are down more than $0.30. Cool temps and “widespread” rainfall have traders convinced the corn crop of 2020 is one for the record books with some forecasting a national yield of 180 to 182 bushels per acre. With current soybean crop condition ratings nearing the best on record, soybean yield forecasts have also been raised and now sit at a record-setting +51 bushels per acre. Highlights from this week’s Crop Progress report:
The GD/EX corn condition rating was left at 72%, unchanged from the previous week. This rating is 6 points higher than the 5 year average.
Soybean GD/EX ratings were increased to 73%. A 10% advantage over the 5 year average.
Informa announced their updated production estimates for the 2020 growing season and have the U.S. corn yield at 179 bushels per acre with total production of 15.036 billion bushels. The soybeans yield is at 52.5 bushels per acre with total production of 4.355 billion bushels.
The firm StoneX (formally known as FC Stone) is estimating the U.S. corn yield at 182.4 bushels per acre with total production of 15.320 billion bushels. They project the U.S. soybean yield at 54.2 bushels per acre with total production of 4.496 billion bushels assuming a normal finish to the growing season.
The two charts below show the comparisons of both firms listed above along with USDA estimates for both corn and soybeans. The vertical bars represent the current estimates for the 2020 yield (Informa released their newest yields after this table was made so their July estimate was used). The horizontal lines show the movement of estimates from July through November and ultimately the final, actual yield from the 2019 season. Comparing the August 2019 estimates from Informa and StoneX, notice how closely they correspond to the final USDA yield estimates.
Farm Futures surveyed producers across the U.S. regarding their expectations for 2020 yields and found most believe corn yields will increase by an average of 11.5 bushels per acre over those of 2019 to 178.9. If these estimates hold true, U.S. corn stocks will reach the highest level in 33 years. Soybean yields are also expected to move up by 3.6 to 51.0 bushels per acre in 2019. Another interesting note from the survey- At the time this survey was collected 34% of those that responded reported still having 2019 corn inventory in storage, as of the end of July, 27% of those same producers reported still having some inventory in bins.
There are a lot of weather “experts” you can chose to follow online these days and often times their forecasts aren’t as accurate as you would like to assume they would be. For several years now I have found my most reliable sources that I like to follow, none of them are right 100% of the time but in combination they’re worth following.
Several years ago one of these individuals, Iowa State Climatologist Elwynn Taylor, warned of a dry pattern that would develop and last for several years. Taylor has spent decades verifying and perfecting his knowledge and use tree rings in predicting the timing of repeated patterns in climate. The history found within tree rings can give researchers a window into the distant past and hints of what to expect in the future. Taylor presented his climate outlook again earlier this year at the Iowa Power Show in Des Moines where he explained his science. He told listeners that he foresees another dust bowl occurring in 2025 because according to history, the Midwest goes through cyclical patterns of mild climate followed by turbulent climate conditions, “In trees, you can go back and see what the climate has been in the past and when it repeats.” He went on to say, “18 years in a row had fairly consistent yields and increase to yields due to corn breeders. 25 years in a row volatile weather followed, 18 years of fairly consistent, and then we go into 25 of volatile-that’s where we are now, in the years that can have greater variation.” “2025, what is the magic thing about that year? When we looked at those tree rings, there have been dust bowls more than once in this part of the country, and they’re 89 years apart- or 90, or 91, or 88 or 87, but 89 on the average-looking back for 600 years from the growth of our oak trees that survived in Iowa.” These tree rings show that the pattern has repeated five times. During the 1800’s the event occurred in 1847 and in 1900’s the event, known as the Dust Bowl, occurred in 1936.
Taylor explained the usual progression of a drought in Iowa and the Midwest takes place over a few years. “In 150 years, every drought we’ve had in Iowa started in either Texas or North or South Carolina, and a year later it gets here.” Also of note, droughts in Texas tend to start in Georgia so there is a multi-year lead to watch for. The droughts that begin in the Carolina’s typically travel through the eastern Corn Belt before arriving in Iowa. He used the recent example of the 2012 drought in Iowa which most of us all remember. He explained that in 2010 the East Coast experienced a drought, then the east-central Midwest in 2011 and 2012, and then western Iowa and the rest of the Corn Belt in 2013.
Next week I will present the long range outlook from another of my trusted weather outlets regarding this same subject. It will be interesting to compare their predictions.
A look at the current precipitation forecast through Monday is shown on the first map below. While there appears to be widespread rainfall across much of the country very few regions across the Corn Belt are expected to receive an inch or more of precipitation.
Looking at next week we see a return of above normal temperatures across most of the country. Above normal precipitation is also expected across a large section of the Corn Belt.
For the period of August 12th through the 19th the heat remains firmly in place. Most of the Corn Belt can expect to see below normal rainfall during this week.
The Forecast Precipitation map shows the expected rainfall totals relative to normal over for the 15 day period from August 5th – 20th. It gives us a much better idea of the extent of rainfall expected in key growing areas during the hot days ahead.