COLUMN-Reality Check: Will adding fringe US corn acres drag down yield? - Braun

By Karen Braun

NAPERVILLE, Illinois, April 15 (Reuters) - U.S. corn farmers this year are set to plant one of their biggest areas in history as the crop’s profitability potential is unusually strong versus alternative crops.

Both high-yielding and low-yielding states are set to boost corn acres this year, leading some market participants to wonder if the lower-yielding states could weigh down national yield.

The U.S. Department of Agriculture will likely set the 2025 U.S. corn trend yield at 181 bushels per acre, almost 2 bpa above last year’s record. Final yield has fallen short of USDA’s trend for the last six years, suggesting that sub-181 could be in store for 2025.

However, that is a completely separate issue from the one introduced above. Besides, many market analysts use their own trend yield calculations – not USDA’s – in their analyses.

But should those analysts scale back yield assumptions because of the large acreage?

SETTING THE STAGE

U.S. farmers in March told USDA they would plant 95.3 million corn acres this year, about 4% above the recent average.

The top five U.S. corn states (Iowa, Illinois, Nebraska, Minnesota and Indiana) account for around 61% of annual production, and their usual yields are above the national average.

Those five are set to plant 51.6% of U.S. corn acres in 2025, which would represent the median of the latest five years. Assuming a normal portion of the planted acres is harvested in each state, the top five would account for 54.5% of harvested acres, a hair above the recent average.

This exercise shows that there are not a disproportionate number of corn acres this year in either the top or non-top states versus normal levels, which offers early hints toward the conclusion.

TESTING TIME

The baseline 2025 scenario is set by applying average state-level harvested fractions to the corn planting intentions. Each state is assigned a five-year Olympic average yield, which averages the middle three results to kick out extremes.

Those levels would produce a 2025 national corn yield of 176.47 bpa.

If harvested areas are kept unchanged for the top five states but are increased by 5% in every other state, that raises harvested acres by a generous 2.5% or more than 2 million acres.

But that clips only 0.84 bpa (0.4%) off the national yield. And this reflects a more sensitive scenario, too.

If the exact same exercise is performed using the top four or top seven states instead of the top five, national yield falls by 0.78 and 0.59 bpa, respectively.

For completeness, the roles are reversed. If harvested areas are increased by 5% for the top five states and the remaining states’ areas are unchanged, total harvested area jumps 2.9% but yield climbs only 0.18 bpa (0.1%).

These sample computations suggest that all else equal, the current 2025 corn acreage configuration would probably not produce a noticeable effect on national yield.

That is especially true as states are highly unlikely to turn out average yields all in the same year, and these yield fluctuations can easily dilute any detectable differences caused by the acreage makeup.

ALTERNATE SCENARIOS

The impact on national corn yield can be large when lower-yielding states struggle.

Take North Dakota, which accounts for 3.3% of production with an average corn yield nearly 40 bpa below the national. Severe drought in 2021 slashed the state’s yield to a decade low, though national yield still hit 176.7 bpa, a record at the time.

Had North Dakota’s yield and harvested fraction matched its preceding averages in 2021, that would have added 1.62 bpa to the national yield. Drought reduces the portion of planted corn acres harvested for grain, hence the adjustment.

But the heavy hitters have more pull. Drought in Nebraska, which accounts for 11.4% of production, tanked corn yield there to a decade low in 2022.

National yield sank to 173.4 bpa that year. But with average yield and a normal harvested percentage in Nebraska alone, the 2022 U.S. corn yield could have been 2.38 bpa higher.

This suggests that unless a huge swath of planned corn acres don’t get planted this year, analysts should focus their efforts more on yield potential, since that’s where the truly good crops are separated from the average ones.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.