Economist: Bullish Corn Price Hopes Need Lower Production

The August Crop Production report surprised many by forecasting 2017 corn production at 14.153 billion bushels, said Todd Hubbs, of the University of Illinois at Urbana-Champaign, in an article titled “Weekly Outlook: Assessing the Prospects for 2017 Corn Production” in the university’s publication farmdoc daily.  Below is a summary of the rest of his outlook.

The corn yield forecast of 169.5 bushels an acre came under scrutiny because of higher-than-expected forecasts in major producing states.  The question, though, is whether production estimates will change enough to result in higher prices than those currently reflected by the market.

He concluded that with current 2017-18 ending stocks forecast at 2.27 billion bushels, a decline in the corn yield forecast similar to 2010 or 2011 may be necessary to move prices higher in the coming marketing year.




For the week ending Aug. 13, 62% of the crop was reported in good to excellent condition, 12% below last year and 1% above the five-year average.  Last week’s good-to-excellent crop condition rose 2%.  (This week, good conditions dropped 1% but rose 1% in the excellent.)

Data from 1990-2016 showed a downward adjustment in the yield forecast from August to September in 14 years.  The decline exceeded one bushel in nine and two in six.

In 2010 and 2011, the August forecast declined relative to the final yield estimate by 12.4 and 6.2 bushels respectively.  However, the yield forecast change from August to September declined only 2.5 and 4.9 bushels, respectively.

For the last two years, USDA’s August yield forecasts came within a bushel of the final.




The Farm Service Agency’s first report of planted acreage for 2017 on Aug. 10 said 86.8 million acres were planted to corn, lower than NASS’ 90.9 million.

FSA also tallied 950,634 acres of prevent planting, compared with last August when prevented acreage amounted to 1.04 million, and the final totaled 1.052 million.

The states with the largest prevented corn acreage in the August report were Kansas with 119,963, New York with 101,562 and Wisconsin with 97,803.  Prevented acres totaled 26,183 in Illinois, 32,243 in Indiana and 27,811 in Ohio.




Over the last two weeks, Corn Belt temperatures and precipitation have been lower than normal.  The current 8- to 14-day outlook from the National Weather Service Climate Prediction Center indicates cooler-than-normal temperatures for major growing regions and normal precipitation for most of the Corn Belt except for parts of Minnesota, South Dakota and North Dakota.

August conditions do not appear to deviate enough from normal to adjust yield expectations.  However, crop tours provided support for notions the crop does not meet the USDA yield forecast.




There were no sales Wednesday on the livestock exchange video auction.  A week earlier, cattle sold at $115.04 per cwt, down $0.96 from $116.00 the previous week.  Cattle with 1- to 9-day delivery sold at $115.28, versus $116 the previous week.  Those with 1- to 17-day delivery sold at $114.50, and cattle with 17- to 30-day delivery sold at $114.00.

Cash action was seen last week at mostly $110 up to $110.50 per cwt on a live basis, down $4 to $6 from the previous week, and at $175 to $177 dressed down $8 to $10.

The USDA’s choice cutout Monday was down $1.20 per cwt at $193.09, while select was off $0.88 at $191.62.  The choice/select spread narrowed to $1.47 from $1.79 with 72 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Friday was $143.49 per cwt, down $2.31.  This compares with Monday’s Aug settlement at $139.80, down $0.70.