Grain prices hit all-time high as Valley growers harvest

Grain sorghum market prices are said to be phenomenal as growers in the Lower Rio Grande Valley begin harvesting an estimate half million acres, according to Texas AgriLife Extension Service experts. But the larger than usual grain crop comes at the expense of cotton acreage, said LeeRoy Rock, the cotton integrated pest management specialist in Weslaco. “Market prices are at about $10.71 per hundredweight,” said Rock. “That’s almost triple the price growers have traditionally gotten for years.”

John Norman, a crop private consultant, said that for many years, growers got only $3.50 to $4 per hundredweight. “I’ve never heard of prices exceeding $9 per hundredweight,” said Norman, a 35-year veteran of the Valley’s agriculture scene. “It hit $9 back in 1996, but that price didn’t hold; it soon dropped back down to normal. But these prices of almost $11 per hundredweight seem to be holding steady. It’s pretty phenomenal.

Norman attributes the higher grain prices to the coattails of corn prices. “The price of corn drives the price of grain,” he said. “Grain sorghum has always been considered the stepchild of corn. If corn prices go up, so does grain sorghum and vice-versa.”

Norman attributes the higher prices to the increased demand for corn for ethanol production plus speculative buying. Most of the Valley’s grain sorghum is exported to Mexico where the majority is sold as poultry feed, Norman said. “Some goes to cattle feed, and some is put to ethanol, but poultry is big business in Mexico.”

Another common trend for grain sorghum is that it takes up the slack when cotton acreage drops, as it has been doing steadily in extreme south Texas for several years, Norman said. “Cotton acreage has been steadily declining since the late 90s when the Valley planted 250,000 acres,” he said. “After that it held steady at 200,000 acres per year until about 2005. In 2007, we planted 100,000 acres, and it dropped to only 91,000 acres this year.” Those figures are a far cry from the Valley’s cotton heydays, Norman said. “In 1948 and 1949, the Valley was planting a million acres of cotton,” he said. “Back then this four-county area had 138 cotton gins. We’ve only got 12 now.

Today’s gins are far more efficient than they were back then, but as cotton moved out of an area, the local cotton gin would go out of business.” Low cotton market prices contribute to its declining acreage in the Valley, Texas and the U.S, said Manda Cattaneo, AgriLife Extension cotton integrated pest management entomologist in Gaines County, in West Texas. “Low market prices and the increased cost of cotton inputs, like diesel, fertilizer and seed, plus the risks of weather and insects, all force growers to switch to grain sorghum, corn, soybeans or even wheat,” she said. “Grain elevators in the Valley already have several orders for sorghum, so they’re ready for growers to start cutting grain and bring it to them.”

Despite the steady decline in cotton acreage, Cattaneo thinks cotton will always be around. “My guess is that cotton acreage will remain at 95,000 acres,” she said. “Growers will not stop planting cotton because it’s a good rotational crop.”

At about 70 cents per pound of lint, Norman said cotton prices to growers are just below the break-even price of 72 to 73 cents for the Valley’s dryland farmers. “That low price for cotton is what’s keeping acreage down all over the country,” he said. “But next year is shaping up to be a banner year for cotton growers. Carryover cotton from last year was low worldwide, consumption of cotton is high and decreased acreage this year could all force cotton prices up for 2009.”

The U.S. Department of Agriculture estimates the country’s cotton acreage for 2008-09 to be 9.38 million acres, down from 10.83 million in 2007-08. Texas plants almost half the country’s cotton acreage, according to the USDA. It estimates the Lone Star State will plant a total of 4.72 million acres in 2008-09, down from 4.92 million last year.

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