Crop Production Expected to be Lower

The USDA National Agricultural Statistics Service (NASS) on August 12 released the latest crop production forecasts. Nationally, corn production is forecast at 14.4 billion bushels, down 5 percent from last year while soybean production is forecast at 4.53 billion bushels, up 2 percent. For Nebraska, the USDA forecast total corn production of 1.7 billion bushels, down 8 percent compared to last year, with an average corn yield of 181 bushels per acre, 13 bushels per acre less than last year. Soybean yield in Nebraska is pegged at 55 bushels per acre compared to 63 bushels last year with total production forecast at 305 million bushels, down 13 percent. Lower yields, the consequence of drought, will drag down this year’s production.

With harvest just weeks away, one wonders about the accuracy of the August yield estimates. Figure 1 graphs USDA August forecasts of average corn yields (orange line) for Nebraska along with actual yields (blue line) between 1980-2021. The grey line plots the differences between actual and estimated yields. A point on the grey line above zero indicates actual yield exceeded the estimate. A point below zero indicates actual yield was less than the estimate. The differences between actual and estimated yields averaged 0.56 percent of actual corn yields over the period. In other words, on average, USDA August estimates exceeded actual yields by 0.35 bushels per acre. The largest misses, in percentage terms, occurred in 1983 and 1993 when USDA overestimated yields by 16 percent and 19 percent, respectively.

Figure 1. Nebraska Corn Yield, Actual vs. August Estimate

Figure 2 depicts the same data for soybeans. The differences between actual and estimated yields averaged 1.04 percent. Meaning, on average, USDA estimates were less than actual yields by 0.73 bushels per acre. The biggest misses occurred in 1994 and 2005 when USDA underestimated yields by 15 percent and 13 percent, respectively.

Figure 2. Nebraska Soybean Yield, Actual vs. August Estimate

Yield data from 1980-2021 shows the USDA August yield estimates to be remarkably accurate. Since 1980, the differences between actual and predicted yields averaged just 0.35 bushels for corn and 0.73 bushels for soybeans. Thus, the projections for lower corn and soybean yields this year will likely come to fruition. In fact, the USDA projects lower production for all of Nebraska crops this year: sorghum, down 15 percent; dry edible beans, down 8 percent; sugar beets, down 3 percent; alfalfa hay, down 35 percent; and all other hay, down 6 percent. Lower production and higher input costs are not a good combination for improved returns. Returns should be above average, but not as good as last year.