The historic pattern of U.S. winter wheat yields
The U.S. average winter wheat yield was below trend value in 2011. Market sentiment favors a return to trend yield in 2012. Here we examine the pattern of yields from 1960 through 2011 (Figure 1) to identify any patterns that might be helpful in forming expectations for 2012. See our earlier posts for similar observations for corn and soybean yields in 2012. click image to zoom
That pattern results in the following observations and thoughts:
1. Winter wheat yields have trended higher since 1960. We find that a linear trend is the best fit to actual average yields over that period and that yields have increased at a rate of 0.4 bushel per acre per year. There have been recent periods when it appeared that yields were plateauing, but these periods have not persisted.
2. There has been substantial deviation from the trend yield in individual years (Figure 2). Over the 52 year period, the average yield was above the trend yield in 48 percent of the years and below the trend in 52 percent of the years. Since all deviations from a linear trend must sum to zero, this means that in the 48 percent of the years with an above trend yield the deviations were on average slightly larger than the deviations in the more frequent years when yields were below trend. Specifically, the average deviation above trend was 2.3 bushels while the average deviation below trend was 2.1 bushels. The largest deviation above trend was 6 bushels (1983) while the largest deviation below trend was 5.2 bushels (2002). There were four instances of the deviation above trend exceeding 4 bushels and only two instance of the deviation below trend exceeding 4 bushels. The pattern and magnitude of yield deviations has been very different than that for corn and soybeans where negative yield deviations have been less frequent and larger in size (on average) than positive yield deviations. click image to zoom
3. The 48/52 split between above and below trend yields is a general statement that applies to any year in the sample. A different, but related, question is whether there is a marked correlation between deviations from year-to-year. In other words, is there a tendency towards continuation or reversal of deviations? Figure 3 shows that there is a modest positive correlation (.31) between the yield deviation in the previous year and the current year (correlations can vary between -1 and +1, with zero indicating no relationship). That is, there is a modest tendency for the yield deviation in one year to persist in the following year. It is not clear if this is simply a chance result or if it reflects some form of carryover in growing conditions from year-to-year. click image to zoom