Fundamentally Speaking

The USDA released a number of reports on June 30th including the updated acreage figures and quarterly grain stocks in all positions as of June 1st.

The one set of figures that got our attention was the USDA forecast of 2017 planted other spring wheat acreage at 10.899 million bushels with the harvested area projection given at 10.497 million.

This works out to a 96.3% harvested to planted ratio and would be the lowest such ratio for spring wheat since 95.4% in 2008 and prior to that 93.1% in 2006.

The problem is that this year's spring wheat crop is a disaster and production prospects continue to deteriorate each day suggesting the rate of abandonment will be much higher than the USDA estimated last week with a lot of the wheat either fed to livestock as fodder or perhaps chopped and just incorporated back into the soil.

This graphic measures spring wheat crop conditions around the 4th of July since 1986 along with the percent of the planted acreage that was harvested for grain.

We plot that data against the along with the percent that final spring wheat yields deviated from the 30 year trend labeled in the yellow boxes.

We use our usual ratings system where we weight the crop based on the percent in each category and assign that category a factor of 2 for very poor, 4 for poor, 6 for fair, 8 for good, and 10 for excellent and then sum the results.

This year's crop rating of 596 is the second worst rated crop going back to 1986 with only the 1988 crop worse with a rating of 408.

That year's crop saw a yield 35.1% below trend, the worst in our database with the harvested-planted ratio also the lowest at 78.7%.

Other low rated and low yielding crops were: 1997 with a rating of 672 with yields 14.4% below trend and a harvested-planted ratio of 95.8%, 2002 when yields were 22.7% below trend with a crop rating of 649 and the harvested-planted ratio at 85.5%, and 2006 when final yields were 16.6% below trend with a crop rating around the 4th of July of 666 and as mentioned a harvested-planted ratio of 93.1%.

It seems as of the harvested-planted ratio should be closer to 90% using past years of poor crops and if this was the case then harvested acreage could fall from 10.497 million to 9.810 million, a loss of around 700,000 acres.

(KA)

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