Week17

Corn yield includes the trade estimates for the last few weeks as green dots. I'm in the middle of the trades range. One way to look at is I'm going to be closer than at least half of them.

Last week somebody picked up this blog and reported that last week despite US conditions falling, my results showed and increase in yields. I found this curious so lets take a look.

At the national level, these were the results (comparing July 18 to July 11). So very modest declines, but declines none the less.

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State      : Very poor :   Poor    :   Fair    :   Good    : Excellent
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18 States .......:     2           7          19          51          21                                                        
Previous week ...:     2           7          18          52          21

The model is a state level model, however, so lets look at the key state breakouts.
First July 11th.

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State      : Very poor :   Poor    :   Fair    :   Good    : Excellent
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Illinois ........:     3           9          23          47          18
Indiana .........:     3           9          26          46          16
Iowa ............:     3           7          19          51          20
Minnesota .......:     -           3           9          57          31
Missouri ........:     6          16          28          36          14
Nebraska ........:     1           3          10          64          22
Ohio ............:     2           9          25          47          17

Now July 18th.

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State      : Very poor :   Poor    :   Fair    :   Good    : Excellent
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Illinois ........:     2           8          23          49          18
Indiana .........:     4           9          25          45          17
Iowa ............:     3           8          20          48          21
Minnesota .......:     -           2           8          55          35
Missouri ........:     5          16          31          40           8
Nebraska ........:     1           3          12          63          21
Ohio ............:     2           9          25          48          16

When comparing them by state it is a bit of a mixed bag. The US total condition numbers are weighted by acreage but an extra acre in excellent condition in Iowa probably more than makes up for an acre falling to good condition in most other states. But even in Iowa it is a mixed bag. The difference between fair and good is not the same number of bushels improvement as between good and excellent.

This is true for all states so while the average acre may have seen a very slight decline in the US condition numbers, the state specific changes matter. If this was a single equation national level model, then I might have expected yields to change, but I do each state individually so exactly where conditions change matters.

Week 17 Spreadsheet (3mb)

Week 16

All crop yield and production numbers showed positive change this week.
I'll add some additional state by state analysis in upcoming posts.

Week 16 Spreadsheet (3mb)

Week 15

Just as a reminder, the large spreadsheet with the state by state numbers for the corrected and uncorrected model is available at the link below. I included the yield and production numbers from the latest WASDE report on the graph. No updates on yields for corn and soybeans, but the production numbers do reflect the updated area for these two crops. I discussed the updated cotton numbers in my previous post. The corrected model was spot on relative to the USDA and much closer than the trade estimates (green dots), which at this early stage probably means little other than the crop in the field has really great potential.

There was overall improvement in all three crops this week. Nothing dramatic in the aggregates, some changes on a state by state basis.

Week 15 Spreadsheet (3mb)

Spot on for cotton

I was very close to USDA's cotton production estimate released this week. USDA gives a crop of 18.3 million bales and the corrected model, which is really the 'best guess' was right there at 18.31. This is a good way to clarify again the two different models. The corrected model is the best guess for the crop, understanding that there is often some decline in conditions throughout the year and this is incorporated, just as a USDA estimate should naturally include this when they estimate their relationships in predicting final yield. Alternatively, the uncorrected model is the crop in the field in today's conditions, no forward look as to where it is likely to head. This is in some ways the potential of the crop. If conditions stayed the same (which historically is unlikely) this is what the yield would be. So when folks are talking about the potential of this crop this may be closer to that upside.

This is a big number and adjustment from the USDA which may also signal some of that potential in the cotton crop. I've historically had trouble with the cotton numbers. Last year the model seemed to do quite well but there are some features of cotton when compared to corn and soybeans that make estimates more difficult. I think the one thing you can take away from what the model suggests as well as industry talk is that the current crop has the potential to be quite large. Is 19 million bales possible?

(Green dots are yesterday's trade estimates which ranged from 17.0 to 17.9 million bales)

I'm higher than the trade estimates in cotton

I'm outside the trade range for cotton, with predictions ranging from 17.0 to 17.9 million bales. If we take the best guess, the corrected model estimate, I'm at 18.3 million bales. In talking to some folks in the know, I'd guess I'm at least on the right side of that range. I may be high, but 17 million bales seems low to me at this point.
It is worth noting that I'm comparing my current corrected estimate to the USDA's report tomorrow, but the corrected model also includes some average decline in conditions. The problem is for cotton, that there is often not an 'average' decline, it can be bimodal in nature. Anyone want to comment anonymously about thier own thoughts on tomorrow's USDA report for cotton production?

Biodiesel RIN markets

I've been spending some time with RIN markets over the last year. I've argued that what is keeping biodiesel production down in the first half of the year was in part the uncertainty surrounding the credit, not necessary if the credit was in place or not. In biodiesel, the mandate appears to be fairly binding, and therefore determining quantities for the year. Blenders, however, may be taking a wait and see approach with respect to biodiesel blending, not wanting to blend now, with a higher RIN price embedded in the fuel purchase price only to see congress pass (and retroactively) a credit extension. RIN prices have increased substantially as the probability of an extension fades.

I also have some questions as to why we don't see a greater 2009 to 2010 vintage ethanol RIN wedge, but as we approach a discretionary blending volume near 20% of next years mandate, low and roughly equivalent values between the two vintages of ethanol RINs probably makes sense.

Week 14 WITH a June 30 acreage update

Now with acreage change!

I think it is a bit early to speak definitively about any of the results of the condition model. I haven't gone over state by state results in great detail to see if my re-estimated equations (without redoing the uncorrected/corrected model wedge) is having much of an effect on the results this year but I will say that the 'excessive' moisture in the mid-west seems to be reducing conditions (and model yields) in Iowa. With smaller declines across the northern corn belt. Pennsylvania seems to have had a significant decline this week but I've no information as to why.

Alternatively the rains last week in Texas seem to have boosted the estimate of cotton production by 200,000 bales up to 8.2 million bales in the uncorrected model.

I'll try to add a bit more commentary in the coming weeks, I've been spending my time looking at biofuel RIN markets and preparing for the mid-year baseline run for FAPRI.

Week 14 spreadsheet with acreage change

Update with new acre numbers.

Week14 (NO ACREGE ADJUSTMENT)

I'm using the same acreage with no adjustment from last weeks report.


I think it is a bit early to speak definitively about any of the results of the condition model. I haven't gone over state by state results in great detail to see if my re-estimated equations (without redoing the uncorrected/corrected model wedge) is having much of an effect on the results this year but I will say that the 'excessive' moisture in the mid-west seems to be reducing conditions (and model yields) in Iowa. With smaller declines across the northern corn belt. Pennsylvania seems to have had a significant decline this week but I've no information as to why.

Alternatively the rains last week in Texas seem to have boosted the estimate of cotton production by 200,000 bales up to 8.2 million bales in the uncorrected model.

I'll try to add a bit more commentary in the coming weeks, I've been spending my time looking at biofuel RIN markets and preparing for the mid-year baseline run for FAPRI.

Week 14 spreadsheet

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