Record Corn Crop on Tap

Belly up to the bar, a record corn crop for Nebraska might be on tap. The USDA National Agricultural Statistics Service (NASS) last week estimated Nebraska's corn crop at 1.88 billion bushels, up 9 percent from last year and 1.5 percent more than the previous record in 2021. Average yield, 194 bushels per acre, is estimated to equal 2021 yield but this year's harvested acres, estimated at 9.7 million and the third largest in history, are expected to exceed 2021 acres. Soybean production is also expected to exceed last year, up 16 percent to 309.7 million bushels. But it is not expected to surpass the 2021 record. Soybean yield is pegged at 59 bushels per acre compared to 51.5 bushels last year. Nationally, corn production is forecast at 15.1 billion bushels, down 1 percent, but still the third largest crop on record. Soybean production is forecast at 4.59 billion bushels, up 10 percent and a record high if realized.

History suggests the NASS August yield estimates for Nebraska crops are remarkably prescient. Figure 1 graphs August estimates of average corn yields (orange line) with actual yields (blue line) between 1980-2023. 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. On average, August estimated yields exceeded actual yields by 0.75 bushels per acre over the period. The differences between actual and estimated yields averaged 0.78 percent of actual. The largest misses, in percentage terms, occurred in 1983 and 1993 when NASS overestimated yields by 16 percent (16 bushels) and 19 percent (20 bushels), respectively. Last year's yield estimate overshot actual yield by 2 bushels, roughly 1 percent.

Figure 2 provides the same information for soybeans. On average, NASS estimates were less than actual yields by 0.41 bushels. The biggest misses occurred in 1984 and 1983 when NASS underestimated yields by 27 percent (7.0 bushels) and 26 percent (7.5 percent), respectively. Last year's estimate exceeded actual yields by 6.5 bushels, or 12.6 percent.

FIGURE 1. NEBRASKA CORN YIELD, ACTUAL VS AUGUST ESTIMATE

Source: USDA National Agricultural Statistics Service

FIGURE 1. NEBRASKA CORN YIELD, ACTUAL VS AUGUST ESTIMATE

Source: USDA National Agricultural Statistics Service

NASS also estimates production for most major Nebraska spring crops will be larger this year: dry edible beans, up 38 percent; sugar beets, up 6 percent; alfalfa hay, up 25 percent; and all other hay, up 14 percent. The one exception is sorghum, projected to be down slightly.

Prices already reflect the expectation of a bountiful harvest. Recent cash corn bids in central Nebraska were off $1.20 per bushel compared to last year and soybean bids were down $3.86. With the production estimates, the market's attention has now turned to whether lower prices will incent greater demand. Or a related question, how low will prices drop before incenting greater demand? In its latest estimates, USDA projects lower prices will add to U.S. exports and demand. But even with an uptick in demand, USDA forecasts lower prices for this year's crop compared to last year. Applying USDA estimated farm prices for corn to this and last years' harvests indicates corn producers could see a reduction of $136 million in receipts for this year's crop. No doubt, positive returns will be problematic for the state's crop producers. The silver lining for Nebraska agriculture, though, is lower crop prices also mean lower feed costs for the state's livestock sector.

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