After mid-December, much of Texas remained in the grips of extremely dry conditions. Perhaps not as bad as the historic 2011 record drought, but when you put an overall dry 2012 year with it for a two-year picture, it represents a long stretch of misery for producers.
While some general and even heavy rainfall came over most of Texas on Sept. 28, the water spout just completely shut off for October, November, and December approaching the Christmas holiday season and the end of the year. At least 50% of Texas still was experiencing severe drought, with 23% in extreme drought, and 8% still in exceptional drought during the Thanksgiving-Christmas period.
Fall 2012 was extremely dry, and with temperatures frequently 15 to 20 degrees above normal. Folks parading around in their Bermuda shorts made it hard to get in the "Christmas spirit" and sing about sleigh bells.
"We had one of the driest Octobers on record in Texas, and essentially no rain at all in November," says Dr. Travis Miller, Texas A&M AgriLife Extension Service program leader and Texas A&M University soil and crop sciences associate department head, College Station.
Any winter wheat growth has been extremely limited. The 6 million acres of wheat planted from September to mid-November this fall in Texas was offering little forage for livestock. That's tough on cattle raisers. Typically, 55% to 60% of the crop is grazed in the state for cattle during the winter months. But the wheat is yielding only scare grazing going into this winter.
That means the rebuilding of herds in Texas just isn't happening—in fact, it maybe the other way around—it is possible downsizing of cattle operations could occur again.
~~~PAGE_BREAK_HERE~~~"With the wheat crop looking the way it is now, cattle owners are starting to worry about having to sell the stock they recently purchased and cut back to the bare minimum," says Brady Rose Evans, Texas AgriLife Extension Service agent for Foard County, headquartered at Crowell, near the Oklahoma border.
All about weather
Grain prices in the New Year will be directly tied to favorable weather following the 2012 drought in the Midwest, says Dr. Mark Welch, Texas A&M AgriLife Extension Service economist, College Station.
It's all about the weather," Welch says. "You've got higher prices, and the yield potential is greater if they can get rain."
Texas farmers will plant more corn to take advantage of higher grain prices in 2013, Welch expects.
"Sorghum is a better fit for a lot of areas of Texas and those marginal areas competing with cotton, so sorghum is a better alternative," Welch says. "If we get a lot of moisture, it will also benefit wheat, and there will be a lot of incentive to keep that wheat crop for grain."
But if Santa Claus doesn't bring moisture, the New Year is going to start off pretty bleak for wheat.
"The lack of rain is really taking its toll on everything," says Langdon Reagan, Wilbarger County AgriLife Extension agent at Vernon, some 54 miles west of Wichita Falls in an area that traditionally grows a lot of winter wheat. "The wheat is really hurting."
In fact, conditions have become so severely dry heading into winter that a lot of stocker cattle that had been brought in for grazing already have started to exit the county, Reagan laments.
Up on the Texas High Plains, Mark Brown, Texas AgriLife Extension Agent for Lubbock County, says moisture is needed across the entire region. Brown says winter wheat is showing signs of moisture stress, except for some irrigated wheat fields.
It is even worse to the north at Amarillo.
"Extreme drought, and dryland wheat is in bad shape, some dying," says Burton Williams, AgriLife Extension agent for Hansford County, north of Amarillo.
~~~PAGE_BREAK_HERE~~~Herbert Sprague Jr., AgriLife Extension agent for Lipscomb County in the Texas Panhandle, reports: "Emerged wheat is going backwards."
Take profits along way
Texas A&M Economist Welch adds that corn will be a big player in 2013, and the market will hinge on rainfall.
"If we have a normal weather year, with more acres planted, supply will out run demand," Welch says.
But if it gets dry again, supply will remain a concern, Welch notes, "and we could be right back to $8 to $10 a bushel for corn."
Purdue University Extension Agricultural Economist Chris Hurt agrees. A return to more normal U.S. corn yields in 2013 could send new-crop corn prices spiraling downward, Hurt says. But he notes if drought persists in the New Year in some of the nation's top corn-producing states, the opposite could be true and prices could be strong.
Welch says if there is some profit farmers can lock into today, they should do so, but don't market everything at one time.
"Come February, we will have a good handle on what the South American crops will look like and early planting intentions surveys will be coming out for the U.S.," he notes.
Then by March and April, Welch says, "We start to get reports related to planting pace, emergence, and early crop conditions."
"As the year unfolds, these reports will give us some idea of yield prospects that will shape our price projections," Welch says. "If we are heading for increased supplies relative to demand—then farmers can do some aggressive marketing. If there are emerging production concerns, then it's best to hold on and see how things will play out."
Meanwhile, Texas experienced another mediocre cotton crop in 2012, but at least better than the historic drought year in 2011. According to the National Agricultural Statistics Service, some 4,009,100 bales of cotton had been ginned in Texas by December. In comparison, Texas had ginned only 3,098,450 bales by December last year.
Carl Anderson, Texas A&M University cotton marketing economist emeritus, College Station, says lower price levels for cotton compared with a year ago, and much higher prices for grain and soybeans, have attracted acreage away from cotton to alternative crops.
"It will likely take two years for the excess world cotton supply to decrease enough to support producer prices near the U.S. cost of producing cotton," Anderson says.
The veteran cotton marketing expert says that given plenty of cotton, uncertain Chinese cotton policies, that cotton price movements are expected to be fast and volatile before cotton planting time next spring.
The Texas Legislature only meets in odd years, and so it will convene in Austin during January. After two years of drought it Texas, lawmakers have hinted that the state's growing need for water will be high on the agenda.
While it's wonderful that Texas has such a strong economy, it also is ironic that the state's attractive job environment has meant that the Texas population continues to soar at a rapid pace. That, in turn, just puts more demand on limited water supplies, especially in some parts of the state.
Lawmakers will have to deal with just how to fund a state water plan. The Texas Water Development Board is the state agency charged with maintaining a state water plan, and it says it will take at least $53 billion to fund water projects just in the near term.
Water is everything in Texas.