Market eyes higher yield for US corn; derecho may leave minor dent on output

New Delhi — Market participants expect the US Department of Agriculture to raise its yield estimates for US corn in the upcoming World Agricultural Supply and Demand Estimates report; however, concerns of damage to corn crop has emerged after a derecho windstorm swept across the Midwest, putting the yield expectations at test in the affected areas.

For the 2020-21 marketing season, S&P Global Platts Analytics sees yield estimate for US corn at 180.3 bushels/acre, higher than USDA's July estimate of 178.5 bu/acre. The US corn marketing year runs from September through August.

The derecho – a powerful complex of severe thunderstorms with wind gusts of 80-100 mph— swept across parts of Midwest in the early hours of Aug. 10, flattening standing corn crops and causing damage to grain bins, also raising serious concerns of yield loss in impacted fields.

The storm may lead to minor reductions in US corn production, but the biggest challenge will emerge during harvest because blown over corn is more difficult and time-consuming for producers to harvest, Kyle Tapley, senior agriculture meteorologist with weather agency Maxar, said Aug. 11.

"I am hearing from the market that nearly 20% of yield reduction can be seen on around 2 million acres of corn, so we can probably lose around 80 million bushels (2.03 million mt)," Pete Meyer, head of grains and oilseeds at Platts Analytics, said Aug. 11.

Meyer added that the extent of damage should be clear by the week ending Aug. 21, but the US corn production could probably see a reduction of 50 million-75 million bushels (1.27 million-1.90 million mt) due to the storm.

Arlan Suderman, chief commodities analyst with StoneX Group, said Aug. 10 his seasonally adjusted corn yield model sits at 182 bu/acre this week, but where will it be next week following the storm was the bigger question.

Suderman said that around 10 million acres of corn could be impacted to varying degrees by time the derecho was over.

Corn production in the US in the 2020-21 marketing year is estimated to be at 15 billion bushels (381.02 million mt) from a planted acreage of 92 million acres, according to USDA's WASDE report released in July. The USDA will be releasing its latest WASDE report on Aug. 12.

The strong winds also led to damage to grain storage facilities, which may result in higher selling, analysts said, however they added that panic selling is not expected as of now as harvest of the new corn crop is still far away.