Far West Texas News

Prices strong as growing conditions improve for grain producers

Circumstances are improving for Texas grain producers as spring plantings get underway in southern parts of the state, according to a Texas A&M AgriLife Extension Service expert. 

Mark Welch, Ph.D., AgriLife Extension grain market economist, Bryan-College Station, said strong grain prices, improving planting conditions and lower input costs are likely to encourage producers going into the season.

Welch said soil moisture conditions have improved across much of the state. Some areas in Central Texas, the South Plains, Rolling Plains and Panhandle remained severely to exceptionally dry, but widespread rains have improved conditions for two-thirds of the state, according to the U.S. Drought Monitor.

Some parts of East Texas and South Texas are dealing with excessive rain. Welch said AgriLife Extension agents in the Coastal Bend reported growers were eager to plant corn but that soggy fields are delaying equipment access.

“I do think the moisture improvement favors grain production,” he said. “Some areas need more rain before planting, but most producers are going to plant grain or cotton depending on their rotation schedule. It’s good for growers to have options and moderated input costs creates more room for potential profit.”

Options, outlook improves for Texas grain producers

The U.S. Department of Agriculture will release its early corn acreage estimate soon, Welch said. The expected acres report is based on modeling and limited survey information from growers and economists.

Welch suspects Texas corn acres could increase but said overall market and growing conditions give growers other options. Budgets will be tight, but lower costs for inputs like fuel and fertilizer have increased optimism among growers.

Welch said the cost for 130 pounds of nitrogen fertilizer is $20-$30 lower than this time last year. There are also fewer concerns about fertilizer availability.

The improved circumstances also give producers who planted winter wheat a number of options, he said. Texas farmers have planted the most wheat acres in 30 years. Parts of the state have remained dry and some acres may have failed due to poor germination, but those that emerged and hung on may begin flourishing with warmer temperatures on the horizon.

Producers planted wheat for various reasons – as a winter forage, cover crop, for grain or a combination of those reasons, Welch said. Wheat’s forage value is extremely high due to a short hay supply across the state. Fields could be grazed, baled or chopped for wheatlage and followed with crops like corn or cotton.

Another multi-cropping option is to produce or provide forage for cattle until mid-March and then take the crop to grain harvest in June or July. They could then follow wheat with a short-season sorghum or soybeans, he said.  

“There was a lot of wheat planted in areas that don’t typically plant wheat, so they probably won’t go to grain,” he said. “But they may get some income or benefits from it as a forage.”

Grain prices incentivize increased production

Grain prices remain historically strong despite declining from record highs in 2022, Welch said.

Wheat cash prices are still over $8 per bushel – $8.84 per bushel for the northern Panhandle this week. Cash prices peaked over $12 per bushel after Russia invaded Ukraine last spring. In late summer 2020, the cash price of wheat in Texas was below $4 per bushel.  

Corn prices are also relatively strong – right around $8 per bushel – compared to just below $3.50 in summer 2020. Cash corn was just below $9 per bushel last summer. 

Welch’s only concern for all grains is that better growing conditions and price incentives could translate into more planted acres and higher yields that push supplies beyond demand. A slowing global economy could also tamp demand for grains.

Some mid-western grain-producing areas, especially western Kansas, continue to experience drought that could impact overall U.S. grain production. Production in Brazil, which is expected to be the world’s largest exporter of corn, could also impact prices. Harvest time of Brazil’s second season corn crop coincides with much of Central Texas.

“It’s a big old world, and the competition is growing,” he said. “Weather will be the big factor for everyone and determine supply, but record yields and an economic slowdown could dampen pricing opportunities.”

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