U.S. Corn Yields Above 181.5 in 2023?
“What do you think is the probability of the November 2023 WASDE report estimating a 2023 U.S. corn yield above 181.5 bushels per acre?”
Each year we do a deep dive into historic corn yields to size up the trend-line yields and the range of possible outcomes. The most common year-to-year change is how recent observations affect our thinking about what the upcoming crop might have in store.
The recency bias occurs when our thinking is heavily affected by the most recent experience or observation. For example, consider U.S. average corn yields since 2014:
- 2014: 171.0
- 2015: 168.4
- 2016: 174.6
- 2017: 176.6
- 2018: 176.4
- 2019: 167.5
- 2020: 171.4
- 2021: 176.7
- 2022: 173.3
With only these data, our thinking – along with AI and machine-learning algorithms – would likely conclude a national corn yield in the 170-bushel range is likely in 2023. After all, seven out of the last nine years have observed yields in the 170-bushel club. The highest ever observed yield was in 2021, 176.7 bushels per acre.
Corn Yields and the Trend Line
Figure 1 plots annual U.S. corn yields since 1988, along with the trend line. As expected, a yield trend of 2.08 bushels per acre per year is clearly visible in the data. Also shown is the magnitude of the 2012 drought.
What Figure 1 also provides is a bit more context about all those 17X corn yields over the last decade. In 2014, the corn crop averaged 171.0 bushels per acre, which was a record at the time, and roughly 8.2 bushels above the trend line. Last year’s corn crop, currently estimated at 173.3 bushels, was 6.2 bushels below the trend line. The all-time high corn yield, 176.7 bushels in 2021, was actually 0.7 bushels below the trend line.
The reality is that corn yields from 2014 to 2018 were high and frequently above the trend line. Long-time readers might remember the 2018 articles we wrote about the situation – here and even one titled “Disappointing Yields Ahead?” Since 2019, the story has been flipped, and a streak of below-trend yields has unfolded.
In many ways, the recent string of corn yields is a good reminder that what was a big crop just a few years ago – such as 171.0 in 2014 – has a way of becoming normal and eventually below-trend. It also underscores how publishing yields alone – without considering the trend – can make it difficult to consider what might lie ahead.
The 2023 Starting Point
The trend-line yield in 2023 is 181.6 bushels per acre (Figure 1). This is largely in line with the 181.5 corn yield the USDA used at the 2023 February Ag Outlook Forum. For most of us, the idea of the 2023 starting point being nearly five bushels above anything ever observed is a bit difficult to wrap our thinking around, but it also tells us a lot about the power of the recency bias in 2023.
Range of Possible Outcomes
A final idea worth sharing is the range of possible outcomes in 2023. Using the data shown in Figure 1, we can take each year’s departure from the trend line and consider what that yields would be in 2023 terms, using 181.5 as the starting point.
Table 1 shows the five largest and smallest departures from the trend using data since 1988 and the size of the yields in 2023 terms. The 2012 crop, which was more than 35 bushels below the trend line, would be 146.0 bushels in 2023 terms. This is considerably larger than the 2012 reported yield of 123.1. At the other extreme, the 2004 yield of +17.0 bushels from the trend would be more than 195 bushels in 2023 terms.
There are several variations one could use to consider the range of possible outcomes. First, a different set of years could be used. Second, the departure from the trend could be measured as a percentage rather than an absolute bushel. Table 1 shows one alternative – departure measured as a percentage – and the important takeaway is, again, that the range of possible outcomes is very wide.
Yield Forecast Challenge
At the start of this post, we asked how probable you thought it was that the 2023 U.S. corn crop would be larger than 181.5 bushels per acre.
For the past week, AEI Premium subscribers have been forecasting this question – and others – as part of the 2023 Yield Forecast Challenge. In addition to the challenge and $1,600 award, users get to benchmark their expectations against others. A lesson from last year’s challenge – in which an ag lender won first place and an Indiana farmer placed second – was how pessimistic forecasts were early in the growing season for corn (Figure 2) and soybean (Figure 3). In both cases, the Consensus – or average of active forecasters – was considerably lower than in previous years. Will recency bias and drought concerns have a similar effect on the 2023 competition? Stay curious!
Wrapping It Up
The USDA’s initial 2023 yield forecast will likely be higher than anything observed in recent years. We also believe the historical range of possible yield outcomes is wider than many might anticipate, especially to the upside. This is underscored by Figure 1, which shows how long the big yields in 1994, 2004, and 2009 stood as records. A few times in our careers, a corn yield that is head-and-shoulders above anything observed in recent years happens. However, it’s often only the 2012-like events that get discussed in grain marketing plans.
For those still curious, be sure to check out the 2023 Corn and Soybean Yield Guides. You are also invited to start an AEI Premium trial membership and join the 2023 Yield Forecast Challenge. You could win a grand prize of $1,600!