Three Insights from the 2022 Corn Yield Guide
Each spring, we dig through the historical yield data to provide a framework of what to expect about the upcoming national corn crop. The exercise is helpful as the upward trend in yields over time makes it difficult to consider what a normal yield in 2022 might be or what historic yield extremes would be like in current terms.
The complete 2022 Corn Yield Guide can be accessed through AEI Premium (here). This week’s article summarizes three key insights.
1) Trend Average Exceeds 180bpa
The human tendency of favoring recent observations – the recency bias – and the upward trend in yields can make it difficult to for a reasonable expectation of a typical or normal yield for any given year. Figure 1 shows U.S. corn yields since 1988. For 2022, the trendline yield is 180.3 bushels per acre. This might come with some sticker shock as it is considerably higher than 2021’s “record” yield of 177.0 bushels per acre.
2) “Record” Yields Happen Pretty Frequently
If it feels like record U.S. corn yields happen every few years, that’s because they do. Since 2000, there have been seven years with record-high yields, for a frequency of 33%. If you throw in early USDA yield projections and estimates, it makes you wonder if there are any years without headlines claiming a new “record.”
This points to the shortcoming of only thinking about yields in absolute bushels per acre. For example, the U.S. average corn yield was 177.0 bushels per acre, the largest national corn yield ever published. An equally true alternative headline summarizing the U.S. corn crop in 2021 could be: “U.S. corn crop 1.2 bushels below the trendline.”
While these two statements are both true, they affect our thinking differently, especially about what yield might be possible in 2022. For example, USDA’s early projection of 181.0 might come as a surprise if our context was limited to 2021’s “record.”
3) A Wide Range of Outcomes is Possible
If we dig deeper into the data plotted in Figure 1, we can use historical departures from the trend along with the 2022 trend yield to plot a range of possible outcomes in current terms (Table 1).
Not surprisingly, 2012 is the measuring stick for disastrous yield outcomes. The reported yield that year was 123.1bpa, 36 bushels below the trendline. After a decade of yields trending higher, a 2012-like event in 2022 would be closer to 144.3 bushels.
At the upper end, twice in the past 34 years, the U.S. corn crop has been more than 17 bushels above the trendline. In 2022 terms, this would be equivalent to a yield in excess of 195 bushels per acre.
Finally, historic corn yields are skewed to the downside. This is because the lowest corn yields (2012 and 1988) have a much larger magnitude than the biggest corn yields. The implications of this are that the probability of above-trend yields is not 50% but closer to 63%.
Wrapping It Up
The 2022 Yield Forecast Challenge began on April 15. One question – which users will be forecasting and updating through the November WASDE – is focused on the probability of U.S. corn yields exceeding 181.5 bushels per acre (per the November WASDE). There’s still time to join the contest!
We always wonder when there is sufficient information to update our initial expectations about the corn crop’s yield potential. In other words, when should we update away from the base rate? History alone would tell us the base rate is a 63% chance of above-trend yields for 2022. There are already many conversations about drought conditions, planting progress, and long-range forecasts.
One goal of AEI Premium is to help users insulate their decision-making process from the chaos. In addition to articles, the Ag Forecast Network decision tool helps users filter the noise. For every new piece of data or information that comes your way, consider the two following questions:
- “Does this information cause me to update my prior forecasts?”
- “If so, by how much?”
The Ag Forecast Network is unique in that it provides you with feedback: How have your expectations changed? How does your forecast compare to the benchmark? And, in the end, how well did you score?
In conclusion, there is a lot of uncertainty about the 2022 growing season, and the stakes are high. We hope you join the Yield Forecast Challenge to help upgrade your thinking in how you think about, communicate, and make decisions around uncertainty.