USDA puts off corn harvest adjustments despite weather problems

Source: By Mark Weinraub, Reuters • Posted: Tuesday, June 13, 2017

Rows of corn wait to be harvested in a field in Minooka, Illinois, September 24, 2014. REUTERS/Jim Young
A late start to corn planting, excessive rains in some key production areas and parched soils in others did not jar the U.S. Agriculture Department’s expectations for another bumper crop in 2017.

The government left its outlook for both U.S. corn production and yield unchanged in its supply and demand report released on Friday, delaying for at least a month any attempt to assess the problems that the adverse weather may have caused to crop development.

The USDA, which gives its first official forecasts for new-crop corn and soybean harvests in May, rarely adjusts its outlook in the June report. In the previous 20 years, it has made changes to the corn production forecast five times and to the yield forecast four times. All June adjustments were made to lower expectations for harvest.

The market has begun to account for some bushels being lost to the weather problems even if the USDA has not. Corn futures have rallied 5.4 percent since the start of May. Prices for the new-crop Chicago Board of Trade December corn contract peaked on Thursday at $4.09 a bushel, the highest since June 22, 2016.

The USDA’s most recent conditions report for the crop, released on June 5, rated the corn crop at 68 percent good to excellent, up 3 percentage points from a week earlier but below the 75 percent reported in early June 2016.

The report shows the crop is vulnerable as it heads into its yield-determining phases of development.

“If crop conditions stay below 70 percent good to excellent, then that would be a compelling argument to lower yield in the July report,” said Ted Seifried, chief ag market strategist for Zaner Group.

Even when there are signs of stress on the crop, USDA often keeps its powder dry on any changes in the harvest outlook until July. USDA has adjusted its production view in the July report every time during the last 20 years, reflecting acreage adjustments it releases at the end of June.

Yield changes are rarer, with adjustments coming just five times since 1997. The most recent July yield change was in 2012, when an historic drought caused the government to slash its yield outlook by 20 bushels per acre.

The heavy rains in the eastern U.S. Midwest this spring that analysts and farmers say washed out some plantings this spring may allow USDA to reduce the harvest forecast without touching yield.

“Yield might not change so much, but production may change from acres,” said Karl Setzer, analyst with MaxYield Cooperative.

(Additional reporting by Renita D. Young in Chicago; Editing by David Gregorio)