Revisiting Big Corn and Soybean Crops Get Bigger

In the August 2024 Crop Production report, the USDA projected the U.S. average corn yield at 183.1 bushels per acre, which if realized would be a new national record. This projection was raised a half a bushel to 183.6 bushels per acre in the September Crop Production report. The upward trajectory of the USDA projections naturally leads to the question of whether further increases are in store. There is a long-standing market saying that "big crops get bigger and small crops get smaller." This statement implies that early USDA yield forecasts are “conservative” in years when yields are high and get larger as the forecast cycle progresses and are “optimistic” in years when yields are low and get smaller as the forecast cycle progresses. Some believe that such “smoothing” of USDA yield forecasts, particularly in years of yield extremes, is intentional in order to minimize or spread the price impact of very large or small yields. The general issue of smoothing of USDA corn and soybean production forecasts was analyzed by Isengildina, Irwin, and Good (2004), and specifically, whether big crops get bigger and small crops get smaller by Isengildina, Irwin, and Good (2013). We updated and extended the analysis of Isengildina, Irwin, and Good (2013) in three earlier farmdoc daily articles (August 20, 2014, September 10, 2014, September 28, 2016). The statistical evidence from this body of work simply does not support the conclusion that big corn and soybean crops get bigger or small crops get smaller. Yet, there continues to be widespread belief that there is substantial truth in the old market adage. The purpose of this article is to update our previous analysis with an additional eight years of observations to determine if our previous findings still hold.