October Production Forecast 2019

Major Differences in Production Estimates As 2019 U.S. Growing Season Draws to a Close 

Today, Indigo announced its final U.S. production estimates for 2019: We forecast 12.7B bushels of corn and 3.4B bushels of soybeans, which are 1.1B and 200M bushels below the USDA’s September report for corn and soybeans, respectively. Since our September report, our production estimate increased by 1% for both crops, driven by increases in projected yields. Projected corn yields went from 159.4 bushels per acre (bu/ac) in September to 161.2 bu/ac in October, while projected yields for soybeans went from 45.2 bu/ac to 45.6 bu/ac. Planted acreage estimates of 86.2M for corn and 75.7M for soybeans remain unchanged from Indigo’s report last month.

Significant Variation on State Level 

Relative to historic averages, production estimates show considerable variation on a state-by-state basis. For example, Nebraska is projected to generate 1.8B bushels of corn in 2019, which is up 4% from the 3-year average. Nebraskan farmers were able to get their corn crop in the ground on time, and enjoyed relatively favorable subsequent growing conditions. In contrast, Ohio is projected to be 40% below the 3-year average, due to a significant decrease in acres planted and poor projected yields. The table below shows projected production and associated yields for several major corn-producing states.

state by state_october production_corn

Production estimates for soybeans show a similar dynamic as illustrated in the table below.

state by state_october production_soy

Indigo’s Production Estimates Tend To Be More Accurate than the USDA’s

Indigo analyzed the accuracy of its forecasting techniques against 15 years of U.S. production data. The graph below illustrates an average error (in absolute percent form) of our yield estimates compared to the USDA’s year-end data. In July, Indigo’s average error is approximately 5.5% for both corn and soybeans, which is similar to the USDA’s error rate over the same timeframe. Indigo’s error rate, however, tends to drop significantly by August, especially for corn. By September, Indigo’s forecasts average roughly 2% for corn and a little over 3% for soybeans, which is considerably less when compared to the USDA.

Screen Shot 2019-10-09 at 4.44.42 PM

Favorable Weather Mitigates At-Risk Acres

Indigo’s planted acreage estimate has not changed since last month. Within those planted acres, though, Indigo has tracked a change in those severely delayed acres – areas four weeks or more behind in growth, compared to historical trends. The good news is that the changes are, on the whole, positive: 2.1M total acres were able to catch up since last month, given a continued stretch of favorable weather, bringing the total at risk acres down to 6.5M acres across the Corn Belt. North Dakota, South Dakota, and Minnesota saw the biggest reductions in at risk acres; Ohio and Michigan are, however, showing an increase in at-risk acres. 

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Turning to South America 

In January, Indigo will initiate our South America yield model. We also look forward to the announcement of the USDA’s closeout numbers for 2019 U.S. corn and soybean production at that time.

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