The US winter wheat crop is now 75% planted and 52% emerged, and so next week’s Crop Progress report will include the season’s first crop rating. The implications of autumn GD/EX ratings are mixed, and not overly important, but early establishment does seem to have a loose relationship with production potential – particularly whether drought is established or not. The graphic at left charts initial crop ratings in Kansas and whether yield exceeded trend in that year. There’s only a very weak correlation overall, but our work does suggest that crop ratings above 60% GD/EX more often than not correlate with above-trend yields there. The extent to which yield exceeds trend, however, is less certain – the crop in the fall of 2015 was rated as just 41% GD/EX, and yield exceeded trend by 58%.
And as we’ve mentioned previously there’s a stronger correlation between abandonment and early season crop appearance. Average abandonment in KS over the last two decades rests at 8%. Abandonment last year was exactly 8%, despite a GD/EX rating of 61% in late October, but longer term the data do suggest that, like yield, an initial rating in KS above 60% GD/EX tend to have normal/below normal abandonment. The same holds true for nationwide GD/EX, with 60% seemingly the benchmark for optimism or pessimism as winter approaches. Ahead of next week’s release, whether GD/EX in any one state, or nationwide, falls above or below this will be most important. Key thereafter will be the extent of acreage changes, and it’s far from certain that acreage expands amid rather negative basis and following this summer’s rally, which in the end was very temporary.
Crop ratings next week are fully expected to be rather good, or at least close to normal, following early autumn rainfall. Drought tends to affect winter wheat yields far more than anything else (cold winters, spring frost, etc.) and soil moisture currently is much better than normal, as evidenced in the attached graphic. National GD/EX ratings are forecast at 55-65% GD/EX, vs. a 10-year average of 54%. We further note that 16-30 day climate forecasts indicate normal precip across the Southern and Western Plains, and NOAA’s drought forecast last week did not feature any drought development in TX, KS, OK, CO or NE through the end of January. Weather doesn’t look to be major factor in US wheat futures this season, but rather we anxiously await NASS’s winter wheat seedings number in January.