About This Episode
Steve Johnson of Iowa State University walks Chris Barron through how USDA will build the September 11 report. September now carries the first objective yield survey results of the year, a change from before 2019 when that data appeared in August. Enumerators walk roughly 1,500 corn fields and 1,500 soybean fields across 10 major corn states and 11 major soybean states, oversampling Iowa, Illinois, and Nebraska, alongside an Ag Yield Survey of about 12,000 farmers nationwide.
Johnson's concern is ear weight. Sampling ran the weeks of August 17 and August 24, right as heat and dry conditions were shrinking ears and after the August 10 windstorm. When an ear is not fully mature, USDA applies an implied ear weight of roughly a third of a pound, drawn partly from producer responses and partly from a five-year average that covers an unusually strong run. He expects the September numbers to look large, with the real picture possibly not clear until October.
Satellite imagery is the third method and should locate where wind and drought damage concentrated, but it cannot tell you ear weight outside a randomly sampled field. Johnson expects resampling, moving harvested acre counts as mowed and rolled fields drop out, and no final yield until January. On marketing, he suggests farmers hauling corn at harvest with good basis talk to a merchandiser about reowning on paper and staying long March into South American weather.
“I am going to question the size and the weight of the ears in Iowa after the windstorm of August 10th.”
— Steve Johnson
Key Takeaways
USDA uses three methods: an Ag Yield Survey of about 12,000 farmers in September, the objective yield survey, and a satellite-based yield model.
The objective yield survey walks roughly 1,500 corn fields and 1,500 bean fields across 10 corn states and 11 soybean states, oversampling Iowa, Illinois, and Nebraska.
Sampling happened the weeks of August 17 and 24, while heat and drought were already shrinking ears, so the September number may read high.
For immature ears USDA applies an implied ear weight near 0.33 to 0.34 pounds, based partly on a five-year average from an unusually good stretch of years.
Johnson pegs the derecho zone at roughly 3 to 3.5 million acres, about 3.5 percent of the Corn Belt, and expects harvested acres to move as mowed and rolled fields drop out.
He is more bullish than in prior episodes but still sees carryout near 2.2 to 2.4 rather than the 2.7 assumed on August 12, and no final yield until January.
Full Transcript
Narrator: And it all comes down to this.
Chris
Barron: Two on, two out, bottom of the ninth. The Farmers lead by one. Full count.
Narrator: Here comes the play at the plate, and it's the Ag View Pitch! Welcome everybody to another episode of the Ag View Pitch, and today we're going to talk USDA September 11th report. You've got Chris Barron and Steve Johnson, Iowa State University. Steve, how's it going?
Chris
Barron: It's going well. I think we're ready for the September report. I think people will be, uh, counting this one down. They want to say, see what USDA has to say about the size of the U.S. corn and soybean crop as of September 1st.
Narrator: For sure, for sure. Hey, talk a little bit about how the, the numbers are put together, you know, talk a little bit about ear weight and some of the challenges and some of the issues that we might be seeing coming through this report.
Chris
Barron: Sure. September is now going to be the first objective yield survey results. Prior to 2019, USDA would always do an Ag Yield Survey and they do an objective yield survey and we'd see both of those and we'd see them in August and then we'd argue that USDA doesn't know But then you'd look at their data and you say, my gosh, they went out and randomly sampled, you know, almost 1,500 cornfields and 1,500 bean fields, and their methods are so solid in this objective yield survey that last year in '19, they said, we're not going to release that data. We'll go collect the data, but we're not going to release that until September. And so we're going to see the objective yield survey data in the September 11th report that assumes as of September 1st, this is the size of the crop. So they're going to interview a little over 12,000 farmers nationwide.
Then they're going to walk into these roughly 1,500 corn fields and 1,500 bean fields, uh, across 10 major corn-producing states and 11 major soybean-producing states, and they're going to oversample for places like Iowa and Illinois and Nebraska. And I really think in a year like this, it's going to be important that the objective yield survey methodology is solid as a rock. But Chris, I got to tell you, I am going to question the size and the weight of the ears in Iowa after the windstorm of August 10th.
Narrator: Well, that's interesting. And, and also it's not just the windstorm, as it is, you know, we've seen a lot of the area too, even just outside of the wind area where the derecho went through, where we've had significant drought and that kind of thing, where it's kind of stayed dry even after some of that sampling. So talk a bit about that too.
Chris
Barron: Well, most of the Sampling would have been done the weeks of August 17th and August 24th. So they pull all this information in, in about a 2-week period. And so the fact is, is that these ears were shrinking across the Corn Belt because of the dry conditions in late August and the heat at the same time. Yeah, and the heat at the same time. Those plants that had the wind damage I would guess a lot of those ears, um, had stopped, um, filling. In other words, uh, they might have been at dent, but they weren't at full physiological maturity. So when USDA goes out and collects the August data, that crop was probably shrinking in size, but they're going to have to put some number down.
They're going to count the number of ears, they're going to measure the ear length, in all of these 1,500 cornfields nationwide, but they're going to have to come up with what will be the weight of that ear. Well, Chris, USDA uses a very sound method, but until the corn ear is fully mature, they use what they call an implied ear weight. And that ear weight is coming both from the 12,000 farmers that they sample. They're going to say, hey, you know, what's the— the weight of that ear compared to normal. And that weight tends to be around a third of a pound, 0.33, 0.34, and we can see it in the data they released. I've gotta tell you, on September 11th, if that ear, implied ear weight, was estimated as of September 1st, I'm not so sure that that ear weight is gonna be a 5-year average.
And so I think there's going to be some concern about, well, the data was collected in August, and the heat and the drought basically shrinking the earth size. So I won't be surprised to see the numbers on September 11th seem a little large, and maybe we won't know till October, because we're using a 5-year average of what we call the implied ear weight. There was a, a good article that was written in August of 2016. It was written by Farm Doc, so it's on the University of Illinois site. That would be well worth your time to take a look at this 5-year average ear weight that's used for the objective yield sample. If that corn ear wasn't fully mature, it's assumed it's going to be the same size as what they've been the last 5 years, and I gotta tell you, this has been a pretty good 5-year run of ear weights across the Corn Belt. Interesting.
Narrator: Um, let me ask this question, and it's a little off the ear weight thing, but as far as the damaged acres in terms of the amount of acres, is any of that taken, or how's that taken into consideration?
Chris
Barron: Well, the use of the satellite is the third method. Yeah, the use of a satellite will probably identify where a lot of that damage was focused. So we'll be able to see whatever this magic number is in Iowa, northern Illinois, you know, is it 3 million, is it 3.5 million? So the satellite's probably gonna help zone in, but the fact is, is that you're still not gonna know that ear size and that ear weight except where you actually drew that randomly sampled field and that location of a field. So, you know, it's going to be such a confined area. I won't be surprised that USDA might have to come back and resample some of those fields just because of the variability that was occurring during that, if you would, August, September, October timeframe. And so they might come out and make sure that they've got good representative samples where that damage had occurred. So stay tuned.
Don't think that September 11th at 11 AM, that's the final number, right? It's going to be January before we get the final yield. And I would say there's still going to be some volatility in futures prices because I just don't think we're going to know. We're going to see some adjustments of the likely harvested acres because a lot of these acres that were mowed or rolled, they're not going to be counted now. So they're not going to be in the harvested acre number. So I think these numbers are going to be moving on us. So sometime out here in the September report, October report, probably going to be a lot of price discovery that needs to take place. So this would be a good year to be out in your fields and doing your own estimates and recognizing that, you know, the total acres that we're talking about, it's about 3.5% of the Corn Belt, Chris, to be honest with you.
If it's 3 million acres. That's only about 3.5% of the Corn Belt, but the yield and production is a very productive part of the Corn Belt that could come back, and there will likely have to be adjustments to both harvested acres, and sure there will be adjustments to what that production number is. Um, we won't likely know till January what that total production and final yield is for U.S. corn.
Narrator: And plus the way you, you know, you made the comment, the shrink, the quote-unquote shrinking crop to, you know, across a big area if you look at the drought monitor and everything. Last question I had, you, you mentioned, you know, that's the third method. What's the second method? And before you answer that, I got a mail as a producer, got a letter in the mail from USDA just basically, and I, I was one of the sampled ones in the last report where we plugged in acres and gave them our estimate, got the same form again. So is that the other portion of that equation?
Chris
Barron: That's it, called— yep, that's called the Ag Yield Survey. So you're one of about 12,000 farmers in September. There were 24,000 in August, so you are in the random sample group to complete the Ag Yield Survey, right? So again, 3 methods: Ag Yield Survey,, and we're using that in August through December. The objective yield survey is the one that we usually count on. That's the in-field yield measurements, randomly sampled. That's the objective yield survey. And don't forget, USDA NASS also uses a satellite-based yield model, and that becomes important because now we'll know where the drought-damaged crop is, and we'll know where the wind-damaged crop is. So 3 different methods that USDA-NASS uses for the September 11th report.
Narrator: Awesome. Hey, appreciate that. Is there anything I haven't asked or anything else that you needed to bring up on, on the September 11th report?
Chris
Barron: I've got a lot of farmers that have already got corn priced and they're moving corn at harvest, and I think that's important, uh, is talking to your merchandiser and moving that crop. If this crop does shrink, I could see the potential of using a marketing strategy of staying long futures, of, you know, using a basis contract, maybe a, you know, some sort of minimum price contract. But when we've got all this uncertainty, if you're harvesting early and taking that corn to town and you did a good job, you got a good basis, you might want to consider, you know, some sort of reownership via paper, and you can do that with your merchandiser, you can do that with your broker.
I think I want to stay long the march, and hopefully we'll be able to participate in perhaps a rally that I think could be coming from South American weather uncertainty, and hopefully the funds coming back into this market, because we've we've seen the short covering during the middle 2 weeks of August. We know they can cover their shorts and they come long futures. So again, use different types of risk management strategies and just don't think that this market is done. We found that out in August, but I don't want to get too bullish. I think it's important to recognize that we still got a lot of carryover Again, maybe it's not 2.7 like we thought on August 12th, but it's probably every bit of 2.2, 2.3, 2.4, similar to last year's ending stocks.
Narrator: Yeah, and hopefully we continue to see strengthening demand, or at least consistent demand and follow-through with China too, because that's going to be a huge support as well.
Chris
Barron: I think that's a— and the elections that are out there, right? Just the presidential, but we've got Senate races and we've got House of Representatives races. So I think we've got a lot of uncertainty that are playing playing out in the background. And I'm more bullish about prices than I was on these previous podcasts. And it's not just about Iowa. There are some stars aligning. And when you throw a La Niña into South America, that usually means they go hot and dry, just like we go hot and dry in a La Niña.
Narrator: Yeah, this is a moving target and some things are changing, aren't they?
Chris
Barron: Those that forecast should forecast often.
Narrator: Yeah, right. Exactly. Hey, Steve, we really appreciate your time again today, and we'll stay tuned as we get closer to the report, and maybe after we get through the report and kind of see what the reaction and how things happen there, we'll be back in touch with you if that works.
Chris
Barron: Okay, sounds good. Thanks for the opportunity, Chris. Stay safe.
Narrator: Yeah, thanks a lot, and thanks everybody for listening, and we will catch you again next time on the Ag View Pitch.