Commodity prices favorable for Texas row crop producers

Texas row crop producers might have the luxury of choosing between sorghum, corn and cotton as all three commodities are seeing high prices with the 2021 planting season underway, according to a Texas A&M AgriLife Extension Service expert.

Mark Welch, Ph.D., AgriLife Extension grain economist, Bryan-College Station, said farmers will have options in 2021 based on market prices but may make decisions based on soil moisture levels in their location, input costs, past yields and crop insurance protections.

“This year is unusual in so many ways, but virtually every summer crop is looking at strong prices, and every commodity is looking to buy acres of cotton, corn, sorghum and soybeans,” Welch said. “Texas farmers know what works best for them, and it will be interesting to see what they actually plant because there is strong competition among the various row crops.”

Grain sorghum acres have been strong historically in Texas, though acres have dipped in recent years due to better revenue for corn and cotton, he said. But sorghum’s current price premium compared to corn may reverse that trend and help it eclipse planted corn acres for the first time since 2015. 

Welch said high prices, low input costs, exceptional drought tolerance and strong export demand for feed grain from China make sorghum a more competitive option for Texas producers than seen in recent years. China’s tariff system increases import costs for corn and wheat when imports exceed certain levels. Sorghum and barley do not face the same tariff restrictions.

This gives U.S. sorghum, which accounts for about 80% of global sorghum exports, an advantage in the market that consumes the most food and feed grain globally, Welch said. China accounts for about 80% of global sorghum imports.

“We have very little export competition,” he said. “So, when it comes to exports, you have basically one buyer and one seller, and that can be scary when tensions are high and you’re dealing with a trade dispute. But recent projections from U.S. Department of Agriculture support exporting consistent levels of sorghum to China for the next several years.”

Row crop competition

Welch said steady exports of grain sorghum to China is a big part of its price surge.

Average cash prices for sorghum are $6.40 per bushel compared to $5.90 per bushel for corn, giving sorghum a 50 cent per bushel cash premium over corn, he said. For perspective on how far sorghum prices have come, Welch said farmers were getting $3.40 per bushel for corn and sorghum was $2.95 per bushel, a 45-cent discount to corn, in early August.

Sorghum also has an input cost advantage over corn and cotton, he said. Sorghum seed cost for planting can be much less than that of other crops and generally has lower use requirements for fertilizer and water.  However, the 10-year average sorghum yield in Texas is about half that of corn, 57 bushels per acre compared to 128 bushels per acre.  

Another advantage high-yielding crops like corn and cotton have in this current environment is crop insurance protection. Higher base prices this spring combined with relatively higher average yields can provide higher levels of revenue protection compared to crops with lower average yields.

In addition, for insurance products with a March 15 sales closing date, the base price for corn was $4.58 per bushel compared to $4.40 per bushel for sorghum. These may be important considerations for farmers facing persistent drought conditions that may extend into the 2021 crop year, he said.

“I think we are going to see an increase in grain acres overall, and I think this is a year that we might see sorghum overtake corn in acres planted,” he said. “There are really high cotton prices as well, and we’ve seen that be the crop option preference for a lot of producers in recent years as cotton prices got hot and grain prices were not.”

What follows wheat?

The condition of the Texas wheat crop will also play a role in the acres for corn, sorghum and cotton. For wheat damaged by Winter Storm Uri, especially in areas experiencing increasingly dry conditions, producers could terminate wheat acres early, hope for rain and follow with corn, sorghum or cotton.

“With these prices, there could be a lot of double cropping, which is taking wheat to grain, graze out or forage, and following with a summer crop, if there is time and moisture,” he said. “Sorghum is also a popular choice as a replant option in years in which cotton fields are lost to early season storms.” 

It’s still early, but Welch said he would not be surprised if the U.S. sorghum crop jumped from the 6 million acres planted in 2020 to 8 million acres this growing season when considering the various factors. Texas and Kansas account for the vast majority of sorghum acres. But heavy increases to supplies could negatively impact prices even if demand remains strong.

The USDA survey that provides preliminary estimates for crop acres comes out March 31 and might present a better picture of plantings. But Mother Nature could be a major factor with big swaths of grain producing areas in Texas and Kansas experiencing various levels of drought.

“If there is a huge crop, sorghum will rely on exports to maintain the price premium to corn and there might be some reduction, but it looks like it will likely trade right alongside corn and overall strong grain prices,” he said. “We’ll have a better idea about crop potential if we see some good rain events at and after planting, and we’ll have a better idea about prices in June and early July when southern Texas sorghum is cut and enters the market.”              

AgriLife Extension district reporters compiled the following summaries:

CENTRAL

Very windy and warm conditions dried the topsoil, which allowed rapid corn planting progress. Nearly all counties reported adequate soil moisture. Precipitation was below normal for the year, and the outlook over the next three weeks called for continued dry, cool conditions. Both corn and sorghum acres were expected to increase. A drop in cotton acreage was expected unless dry conditions continued for a couple of weeks once corn was planted. Winter wheat recovery from the freeze was excellent. Less than half of the counties reported poor overall rangeland and pasture conditions. Winter forages recovered dramatically under the warm and damp weather. Winter forages looked good, and livestock were grazing lush green pasture and forages and mostly off hay and feed. Stock ponds did not fill this winter, and water levels were dropping steadily recently. Dairy producers were planting corn silage. Fruit trees were blooming.

ROLLING PLAINS

Conditions were dry across the district. Producers throughout the district were hoping forecasted rains materialized in the coming days. Fields and pastures were short on topsoil and subsoil moisture. Producers were preparing fields for spring planting.

COASTAL BEND

Conditions were warm, humid and windy with up to 0.25 of an inch of rain reported in some locations. People were still analyzing freeze damage to trees, shrubs and plants. Spring gardens were being planted. Conditions were still a little wet to plant in some places, but producers were busy planting corn and sorghum where they could get into fields. Some fields were emerging and had good stands. Rice planting also began. Most cotton farmers were holding on cotton planting, waiting for an ideal five- to seven-day forecast with warmer nighttime temperatures. Supplemental cattle feeding continued as clovers were trying to grow. Many pastures were dry and not greening up as quickly as normal. Some pastures and hay fields were being fertilized. Hay was in short supply. Cattle pricing remained steady, and cattle were in fair to good condition.

EAST

Warmer temperatures helped grasses green up. Producers were able to slow down on feeding hay. Some rain was received across the district, and pasture and rangeland conditions were fair. Subsoil and topsoil conditions were adequate. Cattle prices came up slightly. Livestock were doing fair to good with supplemental feeding. Houston County started to get reports of increasing fly populations. Wild pigs remained a problem in many counties and caused damage to hay meadows and pastures.  

SOUTH PLAINS

Producers across the district received much-needed rain over the past few days. Rain totals ranged from 2.5-4 inches. Farmers will be busy getting their fields ready for planting as soon as the fields dry up. Cattle were still receiving supplemental feed.

PANHANDLE

Conditions remained dry across the district. Northwestern parts of the district reported short to adequate soil moisture levels, while all other areas reported short to very short soil moisture. Pasture and rangeland conditions were very poor to fair. Winter wheat was in poor to fair condition. Oat conditions were fair.

NORTH

Topsoil moisture throughout the district was mostly adequate. Weather was very pleasant following recent rains. Greenup was beginning with good soil moisture, sunshine and warmer temperatures. Winter wheat looked good and benefited from the sunshine, soil moisture and fertilizer. Wheat maturity was still about two weeks behind normal schedule. Corn fields were ready for planting, with some planting started. Planted winter pastures looked good and responded well over the last couple of weeks. Livestock were in good condition. Spring-born calves were doing well. Cows were starting to seek green forages that were responding to great growing conditions but still needed supplemental feed and hay. Good weather also brought more signs and sightings of feral hogs.

FAR WEST

Daytime temperatures were in the high 80s with nighttime temperatures averaging in the low 40s. Limited areas of the district received precipitation, with amounts reaching 0.6 of an inch or less. Winds blew dirt from fields causing very low visibility and even car wrecks. Lack of precipitation, a dry fall and very high winds were causing poor rangeland conditions. Freeze damages were significant to hay crops and olive trees. Winter wheat and oats were only 3 inches tall in places, even with irrigation. Dryland cotton making a crop was questionable. Fieldwork increased over the past week with producers preparing fields and putting up beds. Several growers began pre-watering fields. Pastures were still bare. Ranchers continued to work fall calves with the spring calving and pasture rotations approaching. Beef cattle were still in overall good condition. Farmers in northern parts of the district were moving pivots and doing routine maintenance on them as planting season approached. Lambing and kidding season continued.

WEST CENTRAL

No report.

SOUTHEAST

Rice plantings should begin soon if conditions remain dry. Some fields were drying out, but most were not accessible. Grimes County reported some good rain over the weekend. Pastures were beginning to green up, and landowners began to identify weeds and control them. Rangeland and pasture ratings were fair to very poor with fair ratings being the most common. Soil moisture levels ranged from adequate to surplus with adequate levels being the most common.

SOUTHWEST

Temperatures remained seasonal, and the only rain reported was in Sutton County with 0.85 of an inch. Rangeland and pasture conditions were improving, but winter weeds were emerging in heavy volumes. Guadalupe County reported corn and sorghum plantings continued. Calving and lambing continued. Livestock and wildlife conditions were fair to good with continued supplemental feeding.  

SOUTH

Most areas reported short to very short soil moisture levels with Jim Hogg County reporting adequate levels and Webb County reporting short to adequate soil moisture. Conditions continued to dry in most areas, with gusty winds and no reported rainfall. Wheat and oat fields under irrigation were starting to head. Some wheat fields looked good and were expected to be harvested soon, but yields were expected to be reduced by the winter storm. Corn planting continued, and some sorghum planting was underway. Some cotton was being planted as well. Irrigated crop fields were establishing well, but rains will be needed for plants to progress. Pasture and rangeland conditions continued to improve, and livestock supplemental feeding continued but was slowing down in some areas. Some grazing growth was burned by the freezing temperatures, and dry conditions slowed recovery. Heavy supplemental feeding continued in those areas, and hay and feed were in high demand. Herds continued to be culled, and calves were being weaned. Wildlife were seeking green growth in roadside ditches, which was a looming hazard for drivers. Rainfall was in the forecast for some areas, and producers were hoping storms would create runoff to fill stock tanks. Conditions of plants killed by the winter storm was apparent at this point as surviving plants and trees were blooming. Sugarcane, onions and vegetables were being harvested. Sesame was yet to be planted. In the Hidalgo County area, citrus trees were being fertilized and irrigated. High winds prevented aerial spray applications of fertilizer and herbicides. High winds also knocked down some citrus trees.