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What does The Who Have to do with the U.S. Corn Trend Yield?

Last week, I wrote about the long-term trend in the US average corn yield ( It was motivated by a post by Bob Nielsen of Purdue. Bob presented an amazing chart on the US corn yield going back to 1866. Well, Bob is back this week with another terrific post, this time on the mistakes that can be made by relying on a small sample of years with unusually good corn yields, mainly due to good growing season weather. I highly recommend you read his post. Even if you are not interested in corn yields, it is a superb statistics lesson.

While Bob focused on potential errors in projecting corn trend yields from small runs of unusually good yields, I want to focus here on the opposite error, projecting based on small runs of unusually poor yields. I think this is very relevant when thinking about the potential US corn supply for 2023. To that end, the chart below shows the US average corn yield for the last decade, 2013-2022. The red line is the trend estimated using only the ten observations shown on the chart. Notice that the estimated slope is only one bushel per acre per year. Compare that to the long-run estimate that Bob highlighted of 1.9 bushels per year. I also estimated the trend from 1990-2022 as my own measure of the long-term trend in US corn yield. It is the dotted blue line and it has a slope of 1.97 bushels per year.

You might ask, what’s the big deal as the endpoints of the lines are not that different? In fact, that intuition is correct. The predicted trend yield for 2023 from the red line is 177 bushels and the dashed blue line is 180 bushels. That does matter for projecting supplies, especially in our current tight markets, but it is not a huge difference. Where I think this really makes a difference is projecting potential deviations from trend yield. The last decade of yields and the short-term line could easily lead one to conclude that a yield above 180 bushels is very unlikely in 2023. Not so with the long-term trend model. It suggests there is about a 25% chance of the US average corn yield being 5 bushels above trend, or 185 bushels OR MORE. With really good weather, the US corn yield could be 190 bushels OR MORE. Think about that! Of course, bad yields are also possible using the long-term trend. My point is to not be misled about the potential for really huge US corn crops.

Now back to the title of this post and the rock group The Who (one of my favorites). Those philosophers of rock said it best in their hit “Won’t Get Fooled Again.” Keep that tune in your head when thinking about the potential US average corn yield in 2023. Rock on!

#corn #supply #grains #marketanalysis #rocknroll

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