Uncertainty surrounds Hurricane Harvey damage

Uncertainty surrounding damage to cotton crop in Texas due to Hurricane Harvey


Cotton
The utter devastation of Hurricane Harvey.

The utter devastation of Hurricane Harvey.

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AUTHORITIES will battle immediate threats to life posed by Hurricane Harvey before assessing damage to agricultural industries.

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AUTHORITIES in the United States are dealing with the immediate threat to human life presented by megastorm Hurricane Harvey before thoughts turn to assessing economic damage.

The hurricane has ripped through the Gulf of Mexico region with south-eastern Texas and Louisiana particularly hard, with seven confirmed deaths already recorded.

Some parts of Texas near Houston have received over 750mm of rainfall already.

And the danger is far from over, with weather forecasts suggesting parts of Texas and Louisiana could receive a further 500mm by Thursday.

David Farley, Matrix Commodities, said a tropical storm in the Atlantic off the coast of the Carolinas was keeping the remnants of Harvey parked over south-eastern parts of the US, continuing to push rainfall tallies up.

The most pressing impact upon the US economy will be in the energy sector with reports that up to 20pc of the nation’s oil refining capacity is currently off-line.

The Gulf of Mexico is one of the major oil producing and refining regions in the US.

News of the hurricane’s damage to refining facilities has pushed petrol prices in the US to two-year highs, while crude oil values have fallen as consumers scramble to get their hands on petrol in case of short supplies.

Agriculturally, south-eastern Texas and Louisiana are major soybean, cotton and rice producers.

Initially it was thought the storm would be too late to cause significant damage in the cotton sector as crops were already harvested.

However, reports have come in that the sheer volume of water has damaged cotton storage facilities and that substantial tonnages of cotton could be lost as a result.

A lonely Texas flag rises above rampant floodwaters during Hurricane Harvey.

A lonely Texas flag rises above rampant floodwaters during Hurricane Harvey.

Andy Vestal, of the Texas A&M AgriLife Extension Service, said information gathering had proved difficult due to the ongoing rain and road closures.

However, he said the agricultural and livestock industries were bracing for the worst.

“Damages to cotton, soy and rice crops and harvested cotton in flood zones will likely be extensive,” Prof Vestal said.

He said the livestock industry was also gearing up for some grim finds when floodwaters recede.

“We expect significant ranching fence infrastructure damage near creeks, tributaries and rivers as well as some mortalities.”

Prof Vestal said as of Tuesday the AgriLife extension team were assisting local farmers and ranchers across a 480 kilometre section of the Texas Gulf Coast, pushing inland some 400km.

Tobin Gorey, commodity analyst with the Commonwealth Bank, said cotton prices had been jumping around.

Unginned cotton in Texas is ruined by the storm.

Unginned cotton in Texas is ruined by the storm.

After soaring limit up late last week there was a fall in values with the market taking the view that the storm had mainly impacted areas that had already been harvested.

Prices again spiked on Monday due to concerns the powerful storm had wiped out stored supplies of cotton and a change in predicted course that will see it push into America’s cotton heartland in the Mississippi Delta.

Mr Gorey said the market was currently cautious in relation to potential damage.

“They do not want to be short so that helps prices,” he said.

Mr Farley said high grade cotton supplies would be under pressure.

“The world was already short of high grade cotton, Australian supplies came in short and India has demonstrated it is short.

“The US has largely forward sold in this sector, banking on cotton supplies from southern Texas, it has oversold 1.5 million bales.”

“There will be disturbances due to both lost crop and delays in getting access to the crop which could add heat to prices.”

Flooded cotton near Corpus Christi on the southern Texas coast.

Flooded cotton near Corpus Christi on the southern Texas coast.

Peter McMeekin, origination manager with Nidera Australia, said he felt while the damage will be substantial it will not be as widespread as first feared.

“The huge rainfall was limited to the Gulf states of Texas and Louisiana and on US agricultural futures markets, the recent retreat continued as damage concerns diminished,” he said.

Mr McMeekin said the ongoing implication of the hurricane will be in terms of grain transport logistics, with upcountry storages and the Gulf ports likely to require repairs.

The Port of Houston, the fourth largest port for agricultural exports in the US, remains closed.

Texas ports, including Houston, Galveston and Corpus Christi handle around a quarter of America’s export wheat.

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