Joel Karlin
DTN Contributing Analyst
We read an interesting article this week from University of Illinois professors Good and Irwin entitled “The Historic Pattern of U.S. Corn Yields, Any Implications for 2012?”
With U.S. corn yields seeing back to back years below trend, market sentiment suggests reduced chances for such an occurrence this year, so they looked at past yield data to see if that is a correct assumption.
U.S. corn yields have trended higher over time and a regression indicates that since 1960 yields have on average increased about 1.87 bushels per year.
Over the past 52 years they have found that actual yields were above that year’s estimated trend 60% of the time and below trend 40% of the time.
Since the total of all yield deviations from a linear trend have to equal zero this means that the downward deviations were larger than the upward deviation from trends which are more numerous.
Looking at the data from 1960-2011, the average deviation below trend was 8.6 bushels and the average upward deviation was 5.8 bushels with the biggest upward deviation in 2004 at 16.9 bushels above trend in 2004, with the biggest downward deviation in 1988 of 29.1 bushels per acre below trend.
We have reproduced this chart, but instead of using the bushel per acre figures, we are using the percent deviation from the 1960-2011 trend.
Using these values, the average downward deviation was 8.1% and the average upward deviation was 5.5% with 2004 11.8% above trend and 1988 yields 25.6% below trend.
The take-away points here are that if weather is the cause of yield deviations then good weather is more likely than bad weather any particular year and bad growing years hurt yields much more than good growing years help yields.
Another point on this topic includes our inclusion of a three year moving average of percent deviation from trend.
Over the past 52 years, the average three year % deviation from trend has been essentially zero. So with 2010 1.2% below trend and 2011 5.9% below trend, 2012 would have to average 7.1% above the 1960-2011 trend for the three year average to be zero.
Note the estimated trend yield for 2012 using 1960-2011 data is 158.4 bushels per acre, so 7.1% better than that is 169.6 bushels per acre vs. the 147.2 produced last year.
Good and Irwin in their paper do mention that some feel the trend in yields have increased at a faster rate in recent years but they say that their data has not shown that.
We disagree and note that the 20 year trend shows yields increasing at a 2.12 bushel per acre per year rate as opposed to the 1960-2011 trend of 1.87 with the 30 year trend at 2.02 though the 10 year trend is actually 1.67.
We did an additional study and assumed that yields have been increasing 2.0 bushels per year at a linear trend. In this case the average three year percent deviation was -1.2%.
With 2010 yields now estimated at 4.5% below trend and 2011 at 9.1% below trend 2012 yields would have to come in at 10% above trend to make the three year average off 1.2%.
Keep in mind, using the higher adjusted rate of yield growth puts the estimated 2012 trend yield at 164 bushels per acre and 10% above that is 180.4 bushels per acre.
Source: DTN / The Progressive Farmer
