The magnitude of the U.S. average corn yield in 2012 will be one of the most important factors in determining the average price during the 2012-13 marketing year due to the relatively low level of carry-out from the current marketing year.
Early in the season, yield expectations generally start with an analysis of the trend in historic yields and an extension of the trend into the current year. As the planting and growing season progress, yield expectations are modified by the timeliness of planting, weather developments, and USDA crop condition ratings. The USDA provides survey based yield estimates beginning in August. See this publication for a detailed discussion of the procedures used by the USDA to produce the survey estimates.
At this still early point in the growing season, corn yield forecasts focus on trend yield, which can be thought of as average improvement in yield over time due to improvements in plant genetics and production technology. Analysis of the trend in the U.S average corn yield would seem to be a straight-forward exercise, but there is in fact considerable variation in how that analysis is conducted. The calculation of the value of the 2012 average U.S. trend yield, for example, can vary depending on:
1) The form of the fitted trend (linear or non-linear),
2) The starting date for calculating the trend,
3) The ending date for calculating the trend, and
4) Whether any historic yields are excluded from the trend calculation.
Most analysts fit a linear trend to historic yields, but the starting date for calculating the trend varies depending on whether there has been a perceived change in the trend over time. Most common is the perception that average yields have been increasing more rapidly since sometime in the 1990’s as compared to the 2 or 3 decades earlier.
The perceived higher trend has been mostly attributed to the development and adoption of new plant genetics and/or traits. One of the difficulties of identifying trend shifts in the short term is the potential for other factors, such as extended periods of favorable or unfavorable weather, to impact yields for multiple years.
Sometimes a few historic yields are excluded from the trend analysis with the explanation that such yields were “outliers” that are not likely to re-occur in the future. For corn, candidates for exclusion are typically low yields associated with unique weather events (drought, flood, or freeze) or widespread disease. It is rarer for high yielding years to be eliminated from the analysis.