Shifting long-term weather trends?
A University of Illinois ag economist sees shifts in long-term weather trends and the possibility for a recovery in corn prices.
Scott Irwin has observed little growth in world corn acreage over the past few years. The average global corn yield in the year 2000 was 70 bushels per acre. By 2016, that number climbed to 90.
In each of the last four years, we have been at or above 85 bushels per acre in the world due to great growing conditions here in the United States. This has translated into growing stocks.
“Weather is indeed reflective in those deviations from trend,” Irwin noted during last month’s Illinois Farm Economics Summit.
Irwin cannot find anything in his research which indicates trend yields are going up any faster than before. There was basically only one bad crop in the 20-year period stretching from 1996 to 2016 and that was 2012. There is only one other comparable period – 1948 to 1969.
We have possibly just experienced the best 20 years in Corn Belt growing weather in the past 130 years.
“The current run of good weather is extraordinary and it’s getting long on the tooth,” Irwin said.
According to Irwin, we are going to see a “clustering” of bad weather like we have seen in the past which would give corn prices the chance to recover. Irwin foresees the next five years being better than the past five on the demand side. When it comes to supply, he thinks the big growth is behind us and we are starting to adjust down.
Irwin also anticipates much greater weather volatility in the next five years with risks accumulating more to the upside than downside for corn.