Dolly Destroys Texas Cotton, Sorghum Crops

July 24, 2008 1:48:08 PM PDT
Hurricane Dolly probably doomed South Texas's cotton and sorghum crops already damaged by heavy rains earlier in the summer. But analysts said the loss, while devastating for local producers, will have only a short-term effect on the markets. Nonetheless, "it doesn't look good" for either crop, Texas AgriLife Extension agent Rod Santa Ana said Thursday.

About 92,000 acres of cotton in the region was awaiting harvest until driving rains and high winds stained the cotton and drove the bolls to the ground, where harvest becomes useless. Even if the bolls had remained on the plants, the resulting cotton cloth's quality would have been severely diminished.

No firm figures will be available on the damage until after Dolly passes and cotton producers are able to get back in their fields.

Santa Ana said 170,000 acres of sorghum had already slipped a grade - bringing producers fewer dollar per hundred weight - from rains earlier this month. Farmers were still deciding whether to harvest it at all, when Dolly hit and answered the question for them. It no longer makes financial sense to bring in the damaged plants.

Sorghum is used to feed cattle and poultry in Mexico. Prices of cattle and poultry feed already are soaring as a result of rising corn prices. The recent floods in the Midwest engulfed an estimated 2 million or more acres of corn and soybean fields, and U.S. production of ethanol, an alternative fuel that can be made with corn, also has driven prices higher.

Once fields dry, insurance adjusters will survey sorghum producers' losses.

The loss of cotton acres to Dolly amount to about two-tenths of 1 percent of the world's cotton supply for the year, so it won't affect markets in the long run, analysts said.

Texas, the nation's leader in cotton production, planted 4.8 million acres, more than half the country's 9.24 million acres.

But "a loss of that amount is very serious to the producer that lost it because it's 100 percent of their cotton for the year," said Roger Haldenby, spokesman for the Plains Cotton Growers, which serves 41 Texas counties in the world's largest contiguous growing patch.

The losses could affect futures market but only in the short term, said Mike Stevens of Swiss Financial Services, Inc. The price could tighten the difference for October contracts, now trading at roughly 71 cents per pound, and December contracts, which rose 0.94 cent on Thursday to close at 73.86 cents a pound on the ICE Futures US exchange.

Still, cotton futures have fallen 25 percent from their March high, driven lower by weather-induced declines in corn, wheat and soybeans, which tend to influence cotton futures and other agriculture products.

Don't expect to see the price of cotton clothing rise, Haldenby said.

"I don't see that it would affect the cost of Levi's or Hanes undershirts whatsoever," he said.

The U.S. supply of cotton from this year's crop "is still up in the air and mostly because of West Texas," Stevens said. Severe drought and gusty winds there damaged irrigated and dryland plants in June.

"It's such a mishmash that I don't think anyone is going to have a good handle on it," until September's crop report from the U.S. Department of Agriculture.

The U.S., which exports far more than it consumes, still has about 10 million carryover bales from last year's crop. Demand for U.S. cotton is "very fragile" because of the economic situation as questions of "whether we're really in recession" linger, Stevens said.

India, where the monsoon season isn't coming on as producers there had hoped, is the U.S.'s largest cotton competitor and is working to make inroads to sell more cotton to China than American producers.

A short crop in India could bode well for U.S. producers as supplies would tighten, said John Robinson, an associate professor of agricultural economics at Texas A&M University, said.

"If they come up short that could really make things volatile on the upside for prices to producers," he said.