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March 30, 2011

U.S. Prospective Planting Estimates

On Thursday, March 31st, the USDA will release their Prospective Planting Report for the 2011 U.S. growing season. This report is always highly anticipated, but even more so this year with the tight balance sheets expected for almost all of the commodities.

Corn - For the 2011 U.S. corn crop, it is estimated that U.S. farmers will plant 91-92 million acres and the early yield estimate for the crop is put at 161 to 163 bushels per acre. A lot of things could happen between the time the Prospective Planting Estimate is released and the actual crop gets planted, but the current weather pattern indicates that it will not be an early spring. It snowed over the weekend in the southern Midwest and the high temperatures in the northern Midwest were only in the 30's. If we do have a late spring and delayed planting, then the 91-92 million acre estimate may end up being at the upper end of the eventual total planted acres.

As far as potential yields are concerned, the corn genetics improve every year with improved disease and pest resistance and some seed companies are now releasing corn hybrids with improved tolerance to dry weather. The improved genetics alone can account for a 1-2 bushel per acre yield increase year-on-year. Eventually though, it's the summer weather that will end up having the greatest impact on yield, but in general, earlier planted corn tends to yield higher than later planted corn although 2010 was a notable exception to that generalization. Last year, American farmers planted their corn crop at a record pace, yet the yields ended up being disappointing.

With that said, it is still valid to be on the upper end of the yield estimates if the corn gets planted in a timely fashion and on the lower end of the yield estimates if the corn planting is delayed. In general, 50% of the U.S. corn crop should be planted before the 10th of May in order to achieve trend line yields. If the 50% mark is reached after May 10th, the chance of reaching trend line yields diminishes.

The U.S. corn yield estimate will remain at 161 to 163 bushel per acre until it is evident when 50% of the crop will be planted.

Soybeans - For the 2011 U.S. soybean crop, it is estimated that U.S. farmers will plant 77-78 million acres and the early yield estimate for the crop is put at 43-44 bushels per acre. A lot of things could still impact the planted acreage and if it does turn out to be a late spring, there is a likelihood that some of the acres intended for other crops such as spring wheat and corn may end up being planted to soybeans instead. Therefore, the 77-78 million acre estimate may go higher before the planting season ends.

As far as the soybean yields are concerned, the soybean genetics also improve every year as well although not as fast as it does for corn. Additionally, nearly all the genetic improvement for soybeans over the last decade or two has been for tolerance to specific herbicides, which doesn't necessarily increase the soybean yield. Seed companies are now introducing soybean varieties with improved disease and pest resistance as well as improved tolerance to dry weather. As a result, average soybean yields will continue increasing about half a bushel per year if not more.

The date of planting for soybeans is not as critical as it is for corn unless the crop gets planted very late. As long as the soybeans are planted generally before the end of May, trend line yields should be expected if the summer weather cooperates. The critical determining factor of soybean yields is the weather during the last half of July and during the month of August. Abundant rainfall and normal temperatures during that period usually results in good pod set and good pod filling. Hot and dry conditions during that period can result in poor pod set and poor pod filling.

The U.S. soybean yield estimate will remain at 43-44 bushel per acre until we see the type of weather that occurs during the late spring and early summer.