We do not often talk about oats but in the past it has been seen as a market leader and is one of the earliest crop to be planted.
Similar to other members of the grain and oilseeds complex, it also has been making contract highs on a daily basis, and at values in excess of $4.00 per bushel, it is trading at levels not seen since May of 2014.
Earlier this week the USDA released its first national oats condition report for the 2021 season using 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 graph plots the first oat crop rating of each year from 1996 to 2021 along with the rating seen the last week of July when the crop is well advanced and close to being harvested on the left-hand axis.
On the right-hand axis is the percent that the final oat yield of each season deviated from the 25-year trend.
This year's initial oat rating is 664 and that is well below the year ago 750 and the 1996-2020 average of 724 and is in fact the lowest first crop rating of the year since 2011 and is the third lowest initital crop rating since 1996.
Given that the bulk of oats are grown in the Upper Midwest, Northern Plains and Texas, three of the many areas in the U.S. suffering from very dry or even drought conditions this really is no surprise.
Still there is a long way to go as the correlation between the first oat rating and the percent that final yields deviate from trend is inly 16%, but that improves to 44% when using end of July crop ratings.
One of the reasons we were interested in the first oat rating of the year is what it may imply for corn when its first condition report is released later in the month but the correlation here is a rather low 18%.
Nonetheless one of the worst initial oat ratings ever brings to mind how spring wheat, barley and the large amount of corn and soybeans seeded there now over the past two decades will fare in these very arid soil moisture conditions.
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