USDA released the first weekly Crop Progress report of the 2006 growing season Monday afternoon. Winter wheat condition ratings were the key feature in this report. The USDA assessment shows 33% of the crop in good shape and 5% in excellent condition. In contrast, 15% of the crop is very poor, 16% is poor, and 31% is in fair shape.

Current condition ratings reflecting 38% of the crop in good to excellent shape are well below the long-term average of 55%. When the crop went into dormancy last fall, 52% was in good to excellent condition and only 15% fell into the poor to very poor categories.

The Kansas crop has shown some improvement since mid-March in response to the March 17 to 20 storm system that provided beneficial moisture. The portion of the Kansas crop in good to excellent condition matches the national total at 38%, and is up 9 points from the March 13 low. The Nebraska crop has also shown respectable improvement in the last few weeks. Oklahoma and Texas have recovered slightly since mid-March but condition ratings are still quite poor. Texas reports 50% of the crop in very poor condition, 26% poor, 17% fair, 6% good and only 1% in the excellent category. Sixty-two percent of the Oklahoma crop is in poor to very poor shape and only 11% is good with none in excellent shape.

Conditions are substantially better in the soft red winter wheat states. Illinois reports 76% of the crop in good to excellent shape and Indiana checks in with 75% in the top two categories. Missouri says 69% of the crop is in good to excellent shape, up from only 41% last fall.

This afternoon's winter wheat condition ratings should be mildly positive for Kansas City wheat futures and neutral for Chicago. We believe the market consensus was for 40% or more of the crop in good to excellent shape. The current condition ratings are the lowest since 2002 and the third-lowest since 1990.