Indigo July 2019 Production Forecast

 

July 11, 2019

Corn and soy production forecasts for the United States are out: our first end-of-season yield estimates are 159.4 bu/ac for corn and 47.6 bu/ac for soybeans, with total production estimates at 12.4B bushels for corn and 4.2B bushels for soy. This outlook, released a day before the USDA’s July WASDE report, was generated by Indigo Atlas’ machine learning algorithms using satellite, historical crop performance, and weather data. Below, we dig into the circumstances informing these forecasts, dissect the larger story of production in the U.S., and take a look at trends over the past two decades to understand what to expect in the coming months.

First, yield forecasts: For the first two months of the growing season, wet weather and flooding delayed, and even outright prevented, planting; hundreds of fields were underwater, planters were left dormant. Mother Nature killed time, a resource precious to farmers.

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Corn, for example, needs anywhere from 100 to 120 days of adequate sunlight and warmth of around 80 degrees Fahrenheit to reach maturity. These calendar days break down into growing degree days, which are calculated based on the maximum and minimum temperatures reached each day. Seen in the map below, states like South Dakota have seen growing degree days reduced by more than twenty percent compared to the window of May 19 to July 8 at this point in 2018. With the longest days of the year already passed, getting the requisite growing conditions needed to reach maturity will likely require growing conditions to extend well into the fall.

 

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A mix of hot and dry weather followed the rain, impacting both the corn’s pollination period and the soy’s pod filling phase, in which precipitation for the former and humidity for the latter are crucial. A late frost could offset early season issue, but it is not guaranteed to occur.

Indigo’s yield forecasts, given the drastic weather circumstances, come in well under expected trends. At the start of this year, Atlas predicted a closeout of 173 bu/ac for corn and 51 bu/ac for soy, based on upward patterns seen in the last fifteen years of data; the USDA, at the same time, predicted a closeout of 176.1 bu/ac for corn and 49.5 bu/ac for soy. The USDA recently revised this pre-season closeout expectations before August (the standard time for a revision to come forward), bringing corn production down to 166 bu/ac. This unprecedented move speaks to the severity of the circumstances defining 2019 for farmers across the U.S.

Major producers of corn and soy — i.e., Illinois, Missouri, and Michigan, for example — are facing onerous conditions, while states like Texas and Kansas, with fewer acres and typically lower yields, have relatively good production forecasts. A robust corn and soy crop in Texas won’t shift the needle for total production, but under the surface of poor national performance, there is a surprising level of heterogeneity across states. 

Next, acreage forecasts. Two weeks ago, Indigo gave a range of 81 to 89M acres of corn and 89 to 95M acres of soy planted in the U.S. Today, we have revised those ranges to a point: 85.4M for corn and 89.3M for soy. With these numbers, while accounting for the number of acres that are expected to be harvested, Indigo forecasts 12.4B bushels of corn and 4.2B bushels of soy produced in 2019. That is 1.5 and 3.9B bushels below the USDA’s predictions, respectively, as of June 2019. 

Stay tuned for our August crop report, in which we will continue to refine our yield and production estimates as our crop models show either improvements or deteriorations in health.

 

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