USDA released its first weekly winter wheat condition report for the 2018 U.S. wheat crop that will make up part of the supplies for the 2018/19 wheat marketing year beginning June 1, 2018.
Though the percent of the crop rated in good or excellent is 52% this year vs. 58% a year ago, this did not prevent either Chicago or Kansas City wheat futures from making new contract lows this week as the fundamentals for this grain are overwhelmingly bearish.
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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 year's initial winter wheat crop rating of 690 is below the year-ago 724 and below the five and ten-year averages respectively at 700 and 701.
This graphic shows the first USDA winter wheat crop rating vs. the percent that the first winter wheat yield estimate released in May deviates from the 30-year trend.
Looking at the individual 18 states it appears that 12 of the 18 states have conditions below year ago levels with Montana and South Dakota by far the worst.
The devastating drought that slashed those two states hard red spring wheat yields earlier this year has hung on and has already had an impact on the new crop wheat situation.
Keep in mind and as the graphic shows, the relation between the first winter wheat crop rating and the percent yields in the May crop report deviate from trend is very tenuous as conditions over the winter and especially during the spring are very influential on crop development.
The five-year correlation between these two variables is -33.3%, the ten year correlation -28.6% while the 30 year correlation is -8.3%, virtually nothing.