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.