What to make of surprisingly low US crop ratings: Braun
(The opinions expressed here are those of the author, a market analyst for Reuters.)
NAPERVILLE, Illinois - The U.S. corn crop has gotten off to a somewhat disappointing start in what is supposed to be a record producing season.
Meanwhile, U.S. spring wheat is experiencing its second-worst start to the growing season in history after this year's plantings dropped to a 55-year low.
What might these early figures mean for the growing season overall? How do they compare with past years? And where are the problem spots and near-term prospects for improvement?
SHORT OF EXPECTATIONS
The U.S. Department of Agriculture on Tuesday afternoon rated 68% of the U.S. corn crop in good-to-excellent (GE) condition in this season's initial rating, marking the lowest starting health since 2019.
That was well below analysts' average estimate of 73% GE, though initial condition reports from the Crop Watch producers over the weekend averaged out to a six-year low, at least.
A 68% GE is not all that bad. On average over the last three years, the initial U.S. corn score comes in around 72%. Additionally, the slower start may be explainable.
The unanimous feedback from the Crop Watch producers was that it has been too cold, cloudy and rainy, and the plants are not growing quickly. Hail, frosts, wind, rain and even a period of excessive heat recently stressed crops in the western Corn Belt, which was reported by Crop Watchers.
This showed up in USDA's data on Tuesday. Averaging initial corn conditions by state over the past three years, North Dakota and Ohio stand out. North Dakota at 48% GE is 24 percentage points below average and Ohio's 41% is 37 points below.
Conditions in top producer Iowa are 4 percentage points ahead of normal, Illinois is 7 points behind, South Dakota is down 16 points, Nebraska is down 2 points and Minnesota is 4 points behind.
OK OUTLOOK?
Three factors may help ease any concerns about current U.S. corn crop health.
The corn crop is only two-thirds emerged nationally, a lower-than-usual portion to coincide with the first condition scores. This allows for some play in the near-term figures, as newly emerged crops, if in good shape, could boost the overall score next week.
Although not necessarily unusual, less than 40% of corn in Ohio and North Dakota was emerged as of Sunday, possibly allowing for future improvement.
All Crop Watch producers last weekend expressed the dire need for heat and sun, and that should start arriving over the weekend after this week finishes out on the cooler, cloudy side.
The pattern might not necessarily be long-lasting, but even a short, warm, sunny spell in early June can go a long way for early crop growth.
U.S. corn was initially rated 65% GE in 2017, and calculations at the time pointed to near or below-trend yield probabilities. This caused the market to misjudge the crop potential all year, and the 2017 corn crop achieved a new record yield.
The 2017 crop was rated 60% GE by the end of July, not too huge of a change from the initial. So even though 60% would not be considered stellar by itself, the lack of large rating swings that season may have been telling.
WHEAT WOES
U.S. spring wheat was rated 45% GE as of Sunday, tied with 2021 as the second-lowest initial rating over the 40-year history. The worst was 34% in 1988.
Those two years are bad company, as they featured well-below-trend U.S. spring wheat yields as both seasons included drought. The 2025 crop is already starting in the hole as U.S. farmers intend to plant their smallest spring wheat area since 1970.
Some 60% of U.S. spring wheat was emerged by Sunday, comparable to 66% on the same date in 2021.
North Dakota, which produces half of the U.S. spring wheat crop, must remain on watch as only 37% of the wheat there is GE and 26% is considered poor or very poor. Recent cold and wet weather has battered the young wheat crop, so the coming flip to better weather may offer improvement opportunities.
Market analysts had expected the initial spring wheat conditions to come in at 71% GE, so the result was much more shocking than the one for corn.
But the lighter figures for both certainly set up the potential for market scares this summer if an unfavorable weather pattern were to set in. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Writing by Karen Braun Editing by Matthew Lewis)
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