What a difference a year can make.
No doubt, 2009 will be remembered as one of the three driest years in recorded history in the Coastal Bend. Moreover, we had the hottest summer in recorded history for Corpus Christi.
Recently however, the rain events have been frequent, which is a good thing, that is if you are not wanting to plant wheat or a cool season oilseed crop.
However, these rains are certainly improving the outlook for the 2010 crop.
As we reflect on 2009, surely this year will be remembered as one of the worst droughts in recorded history with major crop failures. Crop failure estimates for Nueces County include the following: wheat - 44 percent, corn - 75 percent, grain sorghum - 56 percent and cotton - 97 percent.
Cattlemen were forced to sell cows and in some cases totally liquidate their herds due to no standing forage and lack of hay. All of these factors had a significant impact on Ag income.
I have put together some estimates for total Ag income for Nueces County in sales by commodity. Not surprisingly, grain sorghum was the leading commodity, generating 7.6 percent of total income, followed by cattle at 4.3 percent, other livestock 2 percent, and cotton 1.1 percent.
When crop insurance and farm program payments are included in the overall total agricultural income, the estimates for Nueces County approached $85.1 million, a decline of $58 million from last year. Had it not been for crop insurance, to help offset the severe effects from the drought, which by the way contributed about 65 percent of the total Ag income this year, things would have been much worse financially speaking for the farm sector.
If we look at the big picture, economists use a multiplier factor, which is used to estimate the total economic impact on the local economy and in 2009 Agriculture had a $210 million impact.
This coming year appears full of uncertainty as U.S. farm markets continue to be dominated by the weak general economy. While energy costs have declined significantly from the summer of 2008, input costs remain relatively high and tight credit conditions make it difficult for the agri-business sector to operate smoothly.
Lower energy costs will lower fuel, nitrogen and other energy-related input cost, but most other input costs, such as equipment, repairs, chemicals, labor, seed, etc. will remain high.
In terms of the livestock situation, total U.S. beef exports are expected to be 1.8 billion pounds in 2009, a 3-percent decline from last year. Despite the expected decline, stronger than previously expected year-to-date increases in sales to Japan, Vietnam, and Hong Kong, as well as steady monthly increases to South Korea, have offset some of the losses in sales to the United States' two largest foreign customers, Canada and Mexico.
With the U.S. dollar continuing to weaken against the currencies of major beef-importing country currencies, U.S. beef should be more competitively priced against Australian and New Zealand beef than earlier this year. U.S. exports are expected to increase almost 6 percent next year to 1.9 billion pounds, as foreign demand picks up with macroeconomic conditions that are expected to improve through 2010, according to USDA Economic Research Service.
However, the volatility in cattle and beef prices is expected to continue well into 2010, and the relatively weak demand for beef is expected to pressure prices. Per capita US consumption of beef has declined from 65 pounds per person to 61.5 pounds in 2009.
Looking ahead to the 2010 crop year, prices for grain will be impacted by the degree to which a battle for acres between soybeans and corn drives prices higher, which will depend on crop conditions this winter in South America. As far as cotton is concerned, both the world and U.S. supply/demand situation implies fundamental strength for cotton prices.
Coupled with speculative buying, there has been a strong rally in cotton prices this fall when one would typically expect a softer harvest-time market.
With that said, the market is still subject to uncertainties in both supply and demand. Nobody can ultimately make the call on the price direction, but now next year's cotton prices are currently trading at potentially profitable levels.
The weather outlook for next years crop season looks favorable. The National Oceanic and Atmospheric Administration reports that the most recent tri monthly value of the Oceanic Nino Index (September, October, November) is 1.2. This is the fifth straight three month period with values over 0.5, the official threshold for El Nino categorization.
Current predictions for this weather phenomenon are for it to continue well into next summer (June, July, August). Winter weather in Texas in an El Nino year is usually wetter and colder than normal.
If we can avoid planting delays next Spring, we should be moving into a crop year with good yield potential.
Here is wishing you and yours a Merry Christmas and prosperous New Year.
Jeffrey Stapper is the Agricultural and Natural Resources Agent for Nueces County. Readers may contact him at (361) 767-5217.