The current marketing year provides a good case study for the importance of yield expectations. Given the severity of the 2012 yield decline, it is understandable for traders to be skeptical of 2013’s yield potential (see “Yield undone,” below).
Long-term drought maps still show moisture deficits remaining in the western corn belt. However, weather research shows that carry-in soil moisture deviations have little influence on each year’s yields. The past two significant moisture deviation years (1983 and 1988) are perfect examples. The 1983 season was severely wet, while 1988 was a drought of similar severity to 2012. In each of those years moisture deviations remained through the summer of the next year — just like we are seeing right now. The yields for those two years were hardly abnormal, however: Yields in 1984 ended 2% over the year’s projected trend value; yields in 1989 ended 3% over that year’s projected trend value.