Tuesday, July 24, 2012

Soybeans 36.8 bu/ac Corn 140 bu/ac Cotton 19 million bales

First some house cleaning. My guess that there were three changes that needed to be made in the RIN calculations (a few posts down) may be wrong for one of the assumptions. This only matters to those folks who follow RIN stocks closely.

It seems that the EPA in setting the 20% cap applies it to the RVO  not the mandate levels themselves, and since the RVO is on the gap between the total renewable and advanced mandate THIS WOULD CAP CORN RINS INCOMING FOR 2012 at 2,640 million gallons (not 2779 as below).

From a policy standpoint this decision by the EPA to implement the rules in this way creates less flexibility than if the 20% were applied to the nested mandates and not the gap. In this year and in a future drought year it could make a big difference.


Corn Yield:  140.0 bu/ac
Corn Production:  12,130 million bushels

Soybean Yield:  36.8 bu/ac
Soybean Production: 2,746 million bushels

Cotton Yield:  811 lbs/ac
Cotton Production 19.035 million bales

The big news this week is in soybeans where yields fell another 1.2 bu/ac (or 3.2%) with production falling to 2.476 billion bushels (or 3.3% , abandonment response is very low in beans). In looking at the individual state movements, Iowa conditions took a significant downturn in soybeans this week. The path is consistent with other surrounding states (down!) but the drop was huge! I'm a little skeptical of this move (or I should say the model's response). 10% of the crop fell from good down to poor and very poor, skipping fair condition altogether.

This follows the moving focus towards the bean crop as the corn crop has already taken a beating. For corn this week I ''only'' dropped another 1.9 bu/ac to 140.0 bu/ac but I think the market is trading in the range of 135-137 bu/ac. I've got production of 12.12 billion bushels. I think the issue of abandonment (see below) is keeping my production number up beyond what I think is currently realistic along with the issue of percent vs absolute deviations in the model.

For cotton I remain 2 million bales above the USDA. I'll have to see what Dr. Carl Anderson, Dr. O.A. Cleveland or Dr. Gary Adams are saying to determine how far off I think I am. The information I'm hearing is I'm not even in the same city, let alone neighborhood. This project was started to try to get a handle on cotton yields and production and while it has done a good job for corn and soybeans, its success in cotton has been quite variable.Once again, cotton is causing me significant trouble.


When estimating equations, conditions didn't always come in as significant in the abandonment equation for corn in places like Iowa and Illinois even though we saw a dip in harvested area in 1988. I did drop 735,000 acres from harvested area on this drop in conditions and I'm now under a 90% harvested to planted area but I think it is likely that this number is still to high (historically it was 86.0% in 1988 and 85.9% in 1993). This means that the equations are probably overestimating harvesting rates for a few states by 1-3 percent (maybe more) and this will directly effect production by something a less than that percentage (as the model estimates planted area yields and some of the stuff that was on the lower end of the condition scale is the stuff that is abandoned). I have no reason to doubt harvested area numbers in the range of 84 million acres that I'm seeing reported.

1 comment:

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