The late start to the growing season in the corn belt and the northern plains has farmers and traders worried. But, as a commodity marketing class at the University of Illinois found out there is much more to be learned from the data.
This 400 level agricultural college class taught by Scott Irwin includes guest lectures by Illinois alum involved in price discovery. In this case, Mike Tannura from T-storm Weather in Chicago is teaching them about how the weather and the markets work together. Right now he tells them is a good example of a weather market.
The cold, the snow storms, the damp air hasn’t allowed farmers from Ohio to North Dakota to really begin the planting season says Tannura, “In an ideal world, you would plant all your corn and all your soybeans in a very timely manner. It would all be wrapped up by sometime in the middle of May. Given where we are today, if it turns out to be wet in the first week or two of May, then everybody is going to fall behind”.
The trick is to find and use the weather data which might help determine what the whole of this growing season could be like. Tannura says this April will be one of the three coldest on record in the U.S. Corn Belt. There have been seven similar years since 1960, or the modern corn-growing era. Corn yields fell short in six of the seven.
- The detrended yield for 2018 is about 171 bushels per acre. Most of those years had yields between 166 and 170. One of the worst years was 1983. That was an outlier though. We don’t think that is the one to focus on. It was much lower in the 140’s. - Mike Tannura, T-storm Weather
Those are detrended yields, which puts them on an even footing with today. The point is that this crop season is cold, wet, and late. If it stays that way, and the odds now favor late, then chances are very good that corn yield will be below the trend line.