Prices Healthy But Texas Rain Needed For Livestock, Crops

Cattle outlook is positive and cotton growers are eager to plant again, but rainfall is desperately needed before livestock or crops can make progress in 2012.

Published on: Jan 23, 2012

Agricultural commodities in Texas overall are relatively strong price-wise, especially beef cattle, but after a year of historic drought, the weather must change for the good in 2012 before farmers and ranchers can take advantage of any agricultural strength in the marketplace.

At the annual Beltwide Cotton Conferences in Orlando, Florida in January, David Zierden, State Climatologist for Florida, didn't tell producers—many of them from Texas and the Southwest—what they wanted to hear. Zierden says climate change is real.

"We've changed weather and the atmosphere," he notes.

EXPECT RECORD PRICES. An extremely tight U.S. beef cattle inventory and strong demand has livestock marketing economists predicting record cow-calf prices in 2012.
EXPECT RECORD PRICES. An extremely tight U.S. beef cattle inventory and strong demand has livestock marketing economists predicting record cow-calf prices in 2012.

Zierden says El Nino and La Nina cycles also have a major impact on weather. With El Nino, the ocean temperature in the Central Pacific warms, and rainfall typically increases. But when La Nina is in charge, the ocean surface cools and drier weather in Texas and the South prevails.

"We will see more La Nina," Zierden laments.

He is not surprised.  La Nina cycles often last for several years, while sadly, the wetter El Nino cycles when they do arrive, tend to last just one year.

The colder water from La Nina moves the jet stream to where Texas, for example, gets fewer convective clouds—and that translates to less rain. The effect of La Nina is very reliable in the winter and spring predictions, Zierden notes, more so than summertime.

That doesn't bode well for Texas cotton. In 2010, before the rain just quit, Texas planted 5.5 million acres of cotton and actually took 5.3 million of that to harvest. But in record-drought stricken 2011, Texas planted a whopping 7.5 million acres of cotton, only to take 3.1 million acres to harvest, for a record abandonment of 4.4 million acres.

Water is everything

The 2011 drought reminded agricultural interests and others in Texas that water is everything to the state—and water is limited. Whether it is West Texas or South Texas, the words "limited irrigation" is heard again and again when discussing crop prospects.

In West Texas, Kendall Devault of Farwell figures his irrigation costs amount to $170 per acre. Though expensive, Devault credits water availability and the GlyTol trait for his weed control program, to keeping him in cotton production. He actually plans to grow a dab more cotton in the upcoming 2012 growing season.

Rickey Bearden, a veteran Plains, Texas cotton grower, figures about $120 to $130 per acre for very limited irrigation. Bearden says because of the limited irrigation in his area of West Texas, he actually will be converting a few farms from irrigated to dryland cotton production this year.

"I also will have some half circles of irrigation instead of full circles," Bearden notes.

In South Texas, 2010 and 2011 were huge contrasts also. Now Rio Grande Valley farmers—where the nation's first cotton gets planted—could face serious water shortages if the drought doesn't break in 2012.

"It's ironic that in 2010, South Texas was in danger of Katrina-like flooding, and now we're looking at limited irrigation in 2012, unless weather patterns change drastically," says Juan Enciso, Texas AgriLife Research water engineer at the Texas AgriLife Research and Extension Center, Weslaco.

The big rains of 2010 had filled reservoirs there behind Falcon and Amistad dams, but the 2011 Exceptional Drought (the worst category) in Texas and neighboring Mexico resulted in record water usage. So if rain doesn't come soon—frequently and lots of it—growers likely will face water rationing in 2012. Municipal water will have the priority.

Enciso says South Texas agriculture used more than 1 million acre-feet of water in drought-stricken 2011, compared with 519,000 acre-feet in 2010.

He notes Valley crops require varying amounts of irrigation. For example, sugar cane needs seven to 10 irrigations, while corn requires four to five irrigations, cotton needs three, and grain sorghum only one or two.

Enciso is working with irrigation districts to set up a series of weather stations throughout the Valley to help growers calculate the water requirements for crops.

Wheat holding on

Some of the Texas winter wheat caught some good January rains. But growers know wheat will need more moisture in February and March which often are extremely windy and dry months in the Southwest.

"The winter wheat crop has had a good shot in the arm with the recent moisture events, but it is a long time to spring," says Rick Auckerman, Deaf Smith County Extension agent, Hereford, in the Texas Panhandle. "There is much discussion on what to plant for this spring: reduced corn acres and making up the acreage with cotton or possibly grain sorghum with the extended forecast being short on rainfall."

Auckerman says winter pastures for stocker cattle are in very short supply, leaving cattlemen to supplement with hay or silage for feed if possible.

"Winter wheat is trying to hold on, but more moisture is needed," says Kevin Brendle, AgriLife Extension agent for Dickens County, east of Lubbock, surrounded by some of Texas' most vast ranching country. "Heavy supplemental feeding is being done on 'remaining' cattle herds. Lots of producers sold most of their cattle in the summer."

"Recent slow rains improved forage growth and greened up pastures," says George Gonzales, Webb County Extension agent, Laredo. Supplemental feeding is common.

But if rain does return, expect some happy ranchers because the price for beef is good.

David P. Anderson, with the Texas AgriLife Extension Service, Department of Agricultural Economics, Texas A&M University, College Station, says he expects to see record cattle and calf prices in 2012. 

Anderson says the 2012 beef cattle outlook can be summarized as tighter supplies of cows, calves, feeders, and beef overall.

Derrell S. Peel, Oklahoma Cooperative Extension Service economist, Stillwater, says herd rebuilding will take several years. He notes the Southwest drought slowed any rejuvenation of herds and clearly fueled the national decline in the U.S. beef cow inventory going into 2012.

Anderson and Peel agree tighter supplies of beef will set the stage for higher calf, cattle, and beef prices in 2012.

It is a big election year too—after all.  And the overall economy is expected to grow—although slowly.

As far as the other big two commodities for Texas after cattle, despite the Texas' short crop in 2011, there's plenty of cotton in the world so far in 2012.

But producers should always keep a close eye on China, as both a competitor or potential customer—with that depending largely on whether the Chinese put priority on cotton or grain production.

Meanwhile, both U.S. and world wheat stocks are higher than usual for the 2011-2012 marketing year. Expect corn prices to set a floor for wheat prices.

And in the end—cattle, cotton, or wheat—rain is going to be needed in Texas in 2012.

The memory of more than 30,000 wildfires burning over 4 million Texas acres in 2011 is still fresh. Without rain, wildfires could be common again in the state this year.

Nobody wants to see a repeat performance of that in the Southwest for 2012—and would like to see La Nina make a graceful exit and El Nino a big return.