If you are looking for a year like this one to compare to so you can get a feel for how the market might react, Chris Hurt says there is one out there. But you have to be a bit creative to find it and figure out how the implications are similar or different.
"This season nationally matches up best with 1993," he says. "But it is the reverse situation in the Corn Belt. That was the year the western half of the Corn Belt was hit with heavy rains nearly all year long. The Mississippi River flooded and there was major crop damage in the western Corn Belt. The Eastern Corn Belt was in relatively good shape that year."
This time, of course, the tables are flipped. Reports indicate that so far, most of the western Corn Belt, especially the northwestern portions including western Iowa and Minnesota, and much of Nebraska, look good, with high crop ratings so far. The Eastern Corn Belt is suffering, with Indiana being the worst, followed by Missouri, Ohio and parts of Illinois.
Hurt zeroed in on how markets were affected in 1993. "Farmers in the western Corn Belt kept saying that their yields were going to be hurt even in areas where crops looked decent because they would run out of nitrogen before the crop was finished," Hurt explains.
"The trade basically ignored them and focused on crop progress reports which continued to show a decent amount of the crop in those areas in pretty good shape."
The farmers turned out to be right, Hurt says, and yields were considerably lower than the trade expected in some areas. It wasn't only the trade that misjudged it – USDA overestimated yields as well until late in the marketing year.
It was one of the biggest adjustments USDA has ever made in yield from the August to final estimate, he says. They continued to drop yields throughout the fall.