Prices good, drought bad for Texas cotton

Texas cotton producers could have a tough year due to drought, but good prices are likely to soften the blow, according to a Texas A&M AgriLife Extension Service expert.

Drought and good prices will influence the final total acres of cotton planted, especially in Texas, said John Robinson, Ph.D., AgriLife Extension cotton marketing economist in the Texas A&M University Department of Agricultural Economics, Bryan-College Station. 

Robinson said cotton prices have recovered from a deep slide due to COVID-19. The pandemic recession sent cotton into a spiral as demand for cotton plummeted in April 2020.

Cotton prices bottomed on April 1 last year but began climbing back, in large part due to China purchasing large amounts of U.S. cotton to build up their reserves when prices cratered. The purchases provided cotton with a bump, but prices gained momentum as mills around the world ramped up production this year.  

Robinson said export demand for U.S. cotton has been historically high, which led to a 45-cent rally from below 50 cents per pound April 1, 2020 to 95 cents per pound by March 2021.

“It was an astounding rally,” he said. “Mills around the world from Asia to Turkey ramped up production and bought a lot of U.S. cotton, and the resumption of demand fed upward prices.”

The market has corrected since, and prices settled in the low- to mid-80 cents per pound range, which is still a good price for producers, he said.

Drought, Texas cotton potential

Prices may have recovered, but the opportunity for Texas cotton producers will depend on Mother Nature.

Robinson said the state’s cotton growing regions, from the Panhandle down to the Rio Grande Valley, are experiencing drought at levels that threaten yield potential in both irrigated and dryland fields. And forecasts are calling for drier- and hotter-than-normal weather through May, and then normally hot weather after that. Irrigation would likely not support the crop without rainfall because the moisture deficit is too high.

Irrigation in areas like Far West Texas and the Rio Grande Valley may be limited this season due to rationing by water districts. Furthermore, areas like the South Plains and Panhandle may find irrigation difficult due to water demand and high energy costs.

But that may not dissuade producers from putting seed in the ground because crop insurance prices for lint were at 83 cents based on the recent price surge. The high insurance price cuts both ways. While implying a better safety net against losses, it also raises the value of the coverage, leading to higher insurance premiums paid by farmers.

“It’s one of those years where the possibility of crop failure might lead to more cotton plantings, since cotton performs better agronomically than grain crops in dry conditions,” he said. “It’s still a risk for producers because these dry plantings could get rain and then they have to follow up with weed control and more inputs and end up playing catch-up.”

Producers are also likely to pay more for inputs from fertilizer, seed and herbicides to around-the-clock electricity that runs water pumps and drives irrigation pivots, he said.

Tight supplies a possibility

Robinson said U.S. cotton producers were expected to plant 12 million acres this season, as of USDA’s March 31 estimate. Texas likely will account for 6 million of those acres, and it could climb by several hundred thousand acres due to good market and insurance prices.

High grain prices may have changed some producer’s minds, but the final decision will depend on how producers invested preparation dollars. But even with the high number of acres, Robinson said the cotton supplies will likely be tight after this season due to drought, international demand and low carryover stocks from last season.

Robinson doesn’t expect more than 16 million bales of U.S. production in 2021, which he said would support good prices into summer and could push them further upward if crop abandonment numbers are high throughout the cotton-producing southwest U.S. 

Additional uncertainty surrounds an ongoing geopolitical problem unfolding with China, as retailers have begun boycotting cotton produced in the Xinjiang province because of the nation’s treatment of the Uyghur population. Xinjiang produces 85% of Chinese cotton, and it is unclear whether the boycotts will help U.S. cotton or spiral into another trade war.

“There is above-average uncertainty this season,” Robinson said. “The stories to follow will be drought and the economic recovery and whether it continues to remove some of the hesitation Americans have when it comes to discretionary spending. The China situation is a wild card.”

AgriLife Extension district reporters compiled the following summaries:

CENTRAL

Most areas remained dry, but some rainfall was reported. Cotton plantings were mostly completed, but seeds went into dry topsoil. Cereal crops were flowering, but conditions declined due to drought. Small amounts of rainfall received could help germinate dry-planted cotton and aid cereal crop filling. Bermuda grass was starting to green up. Corn and sorghum crops were in decent condition overall. Foliar fungicides were applied on the best wheat fields to control leaf and stripe rust and Septoria. Forages were not recovering very quickly from livestock grazing due to inadequate soil moisture conditions. Grazing was still available on winter-planted oats. A very small number of corn acres were replanted due to dry soil conditions and inadequate crop development. Livestock were in good shape. Stock tanks continued to decline. The weather outlook called for a cool week with significant precipitation.

ROLLING PLAINS

Areas in the district received cooler weather and much-needed rain, with some areas receiving up to 2.5 inches. Livestock were in fair condition as supplemental feeding continued in areas with limited grazing. Farmers continued to prepare cotton fields for planting.

COASTAL BEND

A little rain was received in some areas, but it was not significant enough to change drought conditions. Some corn fields were moisture stressed. Cotton was still being planted, and plantings were nearing completion. Emergence was slow but good due to cooler soil temperatures and mostly overcast skies. Producers were spraying for weeds in cotton. Rice producers were nearly done planting, and a majority of fields were up and being flushed. Livestock producers were spraying for weeds in pastures. Lack of soil moisture for warm-season forages was a major concern. Overgrazing was prevalent, and herd management decisions were expected soon. Livestock water tank levels continued to worsen. Livestock markets were holding steady for now.

EAST

Much of the district received rainfall with some areas becoming saturated. Producers were waiting for fields and pastures to dry out before fieldwork resumes. Smith County reported below-normal rainfall numbers so far this year. Pasture and rangeland conditions were fair to good across the district. Subsoil and topsoil conditions were adequate. Cooler temperatures at night slowed forage and grass growth. Cattle prices dropped from the previous week. Livestock were in fair to good condition with some supplemental feeding taking place. Large horn fly numbers were reported. Feral hog activity increased across the district. 

SOUTH PLAINS

Slow, drizzling rain was reported over two days. Rainfall amounts ranged from 0.4-1.2 inches across the district. The rainfall kept farmers from working in fields but was a great time for moisture with planting around the corner. Farmers were fertilizing and spraying in preparation for spring planting before the rains. Recent moisture helped winter wheat that was trying to head out. The recent moisture also gave cattle producers a chance to graze winter wheat. Cattle conditions improved with winter wheat grazing. Cattle were in good condition.

PANHANDLE

Northeastern parts of the district reported short to adequate topsoil while all other areas were short to very short on moisture. Pasture and rangeland conditions were poor to good. Winter wheat conditions were very poor to good. Light showers and cooler weather in northeastern areas halted all farming activity. Drizzling moisture was reported in northwestern areas. Producers were irrigating and hoping for rain in drier areas. Fieldwork continued as planting was expected to start in the next 10 days. Irrigated wheat looked good, with many fields getting close to the flag leaf stage. However, there was a good chance of freezing temperatures reaching the mid-20s, which could affect the wheat crop.

NORTH

Topsoil moisture throughout the district ranged from short to adequate. Temperatures were cooler, with colder temperatures in the forecast and a concern for some producers. Parts of the district received some much-needed rainfall as small systems moved through earlier in the week and widespread significant rainfall was reported across most of the district later in the week. Many areas received 1-2 inches of rainfall. Wheat was doing well and heading out. Corn was doing well. The rain and sunshine produced noticeable differences in plant life in a few days span. Livestock were in good condition. Spring pastures were doing well, and spring-born calves looked nice. Horn flies were a problem.

FAR WEST

Daytime temperatures reached 90 degrees at the beginning of the week but gave way to daytime lows in the 50s. Nighttime temperatures were in the low 40s. A very fine light mist delivered trace amounts of moisture. High winds were keeping conditions dry, and wildfires were a concern. Colder temperatures slowed the growth of the corn, sorghum and watermelons. Wheat was expected to be fine as temperatures never got close to freezing. Irrigated wheat fields were cut for round bales of hay. Pecan producers began watering their orchards again. Pastures continued to decline due to severe drought. The cattle were still in overall good condition due to supplemental feed and ranchers avoiding overstocking. However, many producers were starting to ship calves early. Producers continued to work lambs and kid goats. Water was an issue in the Rio Grande Valley. Crops, including alfalfa, oats, wheat and some pecan orchards, were suffering as temperatures continued to rise and less water was coming down the main irrigation canal. Low-quality well water and effluent water were the moisture sources in a majority of the Valley. Some farms without wells had not received any rainfall or irrigation water this year. Those who received water pre-irrigated row crop fields and pecan orchards. Rio Grande Project Water was expected to be released in late-May, which will put water in the El Paso area around the first of June.

WEST CENTRAL

Rain showers and thunderstorms occurred in isolated areas. Some areas received up to 2 inches, while others received only traces of rain. Drought conditions continued through much of the district. Rangeland and pasture conditions were mostly good as spring green-up of warm-season grasses and forages continued. Winter wheat progressed rapidly and was in mostly good condition. Forage and grain sorghum crops were planted. Some spring cattle work began. Producers were selling cull animals, and continued supplementing diets with feed and hay.

SOUTHEAST

Some rainfall was received, but conditions were still abnormally dry. Cooler temperatures arrived mid-week. Rice planting was progressing, but some areas received enough rain to postpone planting for a couple of days. Rains were expected to help pastures that were in bad shape. Livestock were in good overall condition, and grasses were growing well. Rangeland and pasture ratings were fair to very poor, with good ratings being the most common. Soil moisture levels ranged from adequate to surplus, with adequate levels being the most common.

SOUTHWEST

Scattered showers were reported but overall dry conditions continued across the district. Rangeland and pastures continued to decline, and dryland crops were beginning to show moisture stress. Crops under irrigation looked good. Most corn, sorghum and cotton were planted. Cattle markets remained steady while sheep and goat markets were steady to high. Producers were still supplementing livestock and wildlife diets.

SOUTH

Conditions were very hot and dry. Temperatures were milder in Frio County with some light drizzle reported. Jim Hogg County reported some rainfall improved crop and pasture conditions slightly. Hidalgo County reported up to half an inch of rainfall, and Brooks County reported that areas received 0.5-2 inches. Promising forecasts called for rainfall in some areas of the district. Strawberries were being harvested and doing well. Winter forages were being rolled up into bales, and hay producers were watering and preparing for their first major cutting. Wheat was cut and baled, and the rest of the wheat crop was starting to mature and turn color. Corn fields were under irrigation. Crop conditions continued to decline. Cotton planting continued. Pasture and rangeland conditions were poor, and livestock supplemental feeding continued. Pictures of deer at feeders showed very poor body conditions, and cattle were receiving heavy supplemental feed, including hay and prickly pear. Cactus were blooming and about to put on their fruit. Beef cattle conditions were declining, and sale volumes were increasing. Producers were culling deeper and weaning calves early. Local auctions were selling 2,000-2,500 head of cattle per week. Prices on feeder cattle and cull cows were steady to slightly higher. Feed prices increased due to demand. Hay prices were $100 per round bale. Summer grasses were emerging in pastures with enough moisture. Irrigated pastures were cut, baled and fertilized. Fire threat increased as standing grasses dried out. Crops irrigated by the local water canal system looked good. Onion harvesting continued.