NASS is expected to report initial national crop condition ratings for the 2017 corn crop next week. Individual state crop reports have included ratings as the information has been available, but so far the results have been sharply mixed. GD/EX ratings across the Delta and Southern states have so far been higher to sharply higher, with the largest increase noted in LA, where 85% of the crop is rated as GD/EX, or 39 percentage points higher than a year ago. Farther North, just 51% of the IL crop has been rated good or excellent, versus 69% last year, and ratings in MO are at 52% versus 75% last year. But in other Cornbelt states, 82% of the MN crop is GD/EX vs 65% last year, and IA is at 75% vs 73% a year ago. Corn planting (and replanting) operations in the last week have been slowed by additional unwanted rains, and the very mixed Midwest state ratings are building concern of where initial national corn crop ratings might be.
The concern is that the low IL and MO ratings will also be uncovered across the other Eastern Cornbelt states as heavy rainfall and well below normal temperatures have been rather widespread. But do low crop ratings at the start of the season equate to lower corn crop yields? The chart plots the relationship between late May GD/EX corn crop ratings and final yield as percentage of the 30 year linear trend projection. Initial crop ratings, have limited predictive abilities, but do help develop expectations for yield potential. Out of the 31 years that NASS has reported crop conditions, there has been just 17 years that ratings were reported in late May. Of those 17 years, when GD/EX is above 65%, final yield tends to be at or above the 30 year trend. Years below 65% (there are just 4) tend to produce yields below trend (3 out of 4). The bottom line is simply that crops that look good early in the year, have greater yield potential.
As the season progresses, crop condition ratings take on more importance and can be a far more accurate indicator for both final yields – as well as NASS monthly yield estimates. The chart plots the year-over-year changes in crop condition ratings as of late-July, versus the year-over-year change in NASS’s (not WASDE) initial corn yield estimate in August. This simple model clearly shows a very close relationship: crops that appear better than the previous year in late July tend to get a better yield score from NASS, while poorer looking crops are logically scored lower.
We doubt that the USDA will change their yield estimate of 170.7 BPA in the upcoming June WASDE (1.4 BPA over the 30 year trend), but an initial GD/EX measurement under 65% will have the market on alert for lower yield potential in 2017. Ultimately final US corn yield will be a function of the many variables of Mother Nature.
