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Agriculture Today


Texas outlook hinges on rainfall, demand




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February 19, 2014 | 6,576 views | Post a comment

By Blair Fannin

COLLEGE STATION -- Texas A&M AgriLife Extension Service economists recently provided 2014 projections for major commodities produced in Texas, with many pointing to past drought conditions as a key factor in making or breaking a crop.

The Plains region of Texas and part of South Texas were dealt a severe blow in 2013 with drought conditions. However, AgriLife Extension economists say if positive weather patterns develop and lead to periods of timely rainfall, there’s reason for optimism for the 2014 crop year. Livestock markets are also projected to continue to show strength, particularly beef cattle, as inventory levels have yet to recover from lows not seen since the 1950s.

Dr. Mark Welch, AgriLife Extension grains marketing economist in College Station, said 2013 brought record supplies of corn and wheat, but demand remains strong.

“With another year of good growing conditions, look for lower prices,” he said. “But given the strong demand base, look for higher prices on any production concerns.”

Welch said U.S. farmers produced a record corn crop in 2013 of 14 billion bushels.

“In the current marketing year, supply is outpacing demand, resulting in estimated carryover stocks of 1.8 billion bushels,” he said. “This is twice the level of carryover stocks after the drought reduced crop in 2012. In response to this buildup in stocks, the season average farm price for corn is estimated at $4.40 per bushel, down from $6.89 last year.”

Looking ahead to 2014, Welch said the demand base for grain remains strong.

“Use estimates are higher in every category: feed and residual, food, seed, and industrial and exports. The question is whether farmers will switch corn acreage to alternative crops now that prices are near, or in some cases, below the cost of production.”

Meanwhile, cotton prices will be determined by a variety of factors, said Dr. John Robinson, AgriLife Extension cotton economist at College Station.

“The outlook for cotton prices will be determined by a combination of planting and growing conditions for the 2014 new crop, and how much cotton China uses from out of their massive government reserves,” he said. “If China maintains their reserves at their current levels, cotton prices in Texas may range from the upper 60s to mid-70s (cents per pound). If China were to start auctioning off large amounts of their reserves, then Chinese mills would not have to import as much cotton, leaving more surpluses of cotton in the United States that would lower prices another five to 10 cents.”

Rob Hogan, associate professor and AgriLife Extension economist of Uvalde reported the following summary for the South Texas region:

Outlook on Livestock markets: “(With regards to prices) beef looks like higher than last year and higher next year than this year. Although the year started out rather droughty, we started getting rains late summer in both District 6 and District 10 and the grass grew like crazy. The calves look like they should be coming off at a good weaning weight for the year and we are going into the winter with good subsoil moisture, so we should have some good grass next spring.”

2014 General Outlook for Region (weather, yields, other factors): “If we continue getting rains through the winter and into spring, it could really be a good year in 2014. I believe that most producers believe that also.”

Blair Fannin provides media support on the subjects of campus-based agricultural economics and animal science as well as any news or communications related to Texas AgriLife Research and Extension activity in College Station.
 

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