Analysts: USDA corn estimate reasonable | TSLN.com

Analysts: USDA corn estimate reasonable

Anthony Greder
DTN Wire Editor

DTN photo by Dan DavidsonDrown out spots such as this one in Iowa fields may have some wondering how accurate USDA's corn projections are, but most analysts we talked to give government estimators the benefit of the doubt.

OMAHA (DTN) – After hearing reports of late-developing corn and seeing pictures of large patches of empty dirt or water scattered throughout cornfields across Iowa, some people may be scratching their heads at USDA’s latest estimate for increased U.S. corn production and asking the question: “How is that possible?”

USDA, in its first survey-based estimate of this year’s U.S. corn crop, projected total corn production at 12.288 billion bushels, up 573 million bushels from USDA’s July estimate of 11.715 billion bushels. It estimated yields to average 155 bushels per acre, up 3.9 bushels from last year.

That view of the nation’s corn crop doesn’t seem to fit with the picture being painted in states such as Iowa, where farmers and crop experts recently have reported a variety of problems stemming from flooding this spring, which they say could affect yields.

DTN Agronomist Dan Davidson saw some of the problems facing the Iowa corn crop firsthand last week when he flew across the state to assess the health of the crop.

“From the air, things look ugly,” Davidson said. “All the field variation, unplanted spots, spots damaged from drown outs, yellow corn, compaction tracks and other problems are evident, and you know that yield is off trendline.”

With all of the problems he saw, Davidson estimated crop yields in Iowa could be down by 10 to 15 percent this fall.

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Ben Riensche, a corn and soybean grower from Jessup, Iowa, said that after seeing fields in his area and flying over flood-stricken areas of Iowa, Indiana and southern Illinois, he has serious doubts about the accuracy of USDA’s estimates.

“Did they not happen to notice the 500-year flood in Iowa?” Riensche said. “Those numbers just can’t be right. There are gaping flood holes, massive holes, in this crop.”

The late maturity of the crop also makes it unlikely the corn crop will achieve yields anywhere near what USDA is predicting, Riensche said.

“The plants look great, if it was July 20, but it’s August 12,” Riensche said. “We’re having late-September weather right now when what we need is more summer weather. This crop is so late that even a normal frost won’t result in a boost in production.”

If the overall condition of the corn crop in the top corn-producing state of Iowa is as poor as some producers and crop experts say, some might wonder if USDA’s latest estimate for total U.S. corn production is too high.

Yet while growers may have their doubts, the analysts DTN interviewed said USDA’s estimate for corn production isn’t out of line, at least at this point in the growing season.

Dan Basse, president of AgResource Co., said that although USDA’s estimates for yield increases in Iowa and Missouri seem somewhat high given the problems those states have had with flooding this spring and summer, it is reasonable to assume there has been improvement in the crop nationwide since USDA issued its last report in July.

“If you assume normality (for the remainder of the growing season) and averages, you would come up with some of these yield analyses (that USDA included in its report),” Basse said. “Do we have a 12-billion-bushel corn crop? That’s probably the case.”

Bill Tierney, head of North American operations for LMC International and formerly USDA’s principal grains economist, agreed that although USDA’s estimate for U.S. corn production was at the high end of expectations, it was a reasonable estimate. He said a number of different models used by other private analytical firms produced yield estimates similar to those reported by USDA.

For example, Tierney said, a researcher at the University of Missouri Food and Agricultural Policy Research Institute used weekly crop progress reports to estimate average corn yields while another private firm used satellite imaging in its analysis. Both came up with an average yield estimate of 155 to 156 bushels per acre — the same as USDA’s estimate, which it obtained through farmer surveys.

“It’s not like there wasn’t documentation and formal and relatively rigorous analytical models using totally different sources of information that all came up with similar yield projections,” Tierney said. “Yes, (USDA’s estimate) was above analysts’ expectations, but it wasn’t unwarranted based on methods of assessing yields. I would say that there is multiple confirmation that USDA’s yield projection is a valid one for this point in time.”

DTN Analyst Elaine Kub said she too was willing to give USDA the benefit of the doubt on its latest corn production estimate due to the difficulty in measuring final yields at this stage of the corn crop’s development.

“We have to give USDA a rather large margin of error when we compare what these August numbers look like and what we ultimately see at harvest because of the late crop,” Kub said. “My understanding is that USDA counts the number of ears in a sample and then they take an average of what they expect each ear to produce. But this year, the ears are so small, that that may not be anywhere near correct.”

USDA’s estimate that the U.S. will see a larger corn crop this year despite problems created by spring floods in some states came as no surprise to some agriculture groups.

The National Corn Growers Association, in a statement released Tuesday, said USDA’s latest corn production estimate “clearly demonstrates how U.S. corn growers have responded well to significant challenges early in the growing season.”

“This is great news not just for corn growers, but for everyone,” said NCGA President Ron Litterer. “We’re committed to meeting all needs, and this estimate indicates we are growing the corn this year to do so — and provide a solid carry-out into 2009.”

Litterer said near-perfect growing conditions throughout the Corn Belt in July helped account for the increase in production.

“And what also helped was the fact that growers are planning wisely, working hard and using technology on the farm to maximize production, whether in mapping out planting or using seed hybrids that are more resilient,” Litterer said.

Iowa Secretary of Agriculture Bill Northey cited similar reasons for production increases in Iowa, parts of which were hit hard by spring floods.

“The projected size of the crop following the severe weather it endured this year is a testament to the quality of our farmers, the fertility of our soil and the great advancements that have been made in seed technology,” Northey said in a news release.

USDA estimated Iowa’s corn production at 171 bushels per acre, the same as last year, for total production of 2.2 billion bushels.

Though some analysts and ag leaders are willing to accept USDA’s boost in corn production, they stress that much can still happen between now and harvest.

An early frost, for instance, could significantly reduce yields.

“To reach those yield numbers (in Iowa) we will need to continue to have good weather and probably a later-than-normal frost,” Northey said.

As is always the case, actual 2008-09 corn production won’t be known until harvest, DTN Senior Analyst Darin Newsom said.

“We’ll have to wait until the combines roll to see actual production numbers,” Newsom said.

anthony greder can be reached at anthony.greder@dtn.com

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