Markets are quiet to start the day with corn and soybeans unchanged.
Weekly export sales came in below the 10 week average for corn at 34.8 million bushel compared to 47.1 on the ten week average. Soybeans were stronger and the best in the last 10 weeks at 44.3 million bushels as we continue to see Chinese sales ramp up.
The USDA’s CFAP announcement has generated as many questions as answers regarding payment, qualifying production, and qualified inventories. The FSA is trying to catch up with training to get the answers needed on a granular level that are so important. According to the announcement producers will be paid based on inventory subject to price risk held as of January 15, 2020. A single payment will be made based on 50% of a producers 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, multiplied by 50% and then multiplied by the commodity’s applicable payment rate. (Corn rates are .32/bu for the CARES Act and .35/bu for the CCC payment, soybean rates are .45/bu for CARES Act and .50/bu for the CCC payment) This means that producers will receive $.335 per bushel of corn that they had price risk on as of January 15th and $.475 per bushel of soybeans that they had price risk on as of January 15th. The big question that is still trying to be clarified is what qualifies as “price risk”? In early conversations with county agents, here is my understanding of what would be considered to have price risk:
1. Any bushels that you had stored on farm or in an elevator that had no contract in place for those bushels.
2. Any bushels that you had stored on farm or in an elevator that had an open component on the contract.
A. Example – If you had a basis contract in place for June delivery of corn that you had stored on farm or in elevator, but had not set the futures price on it yet.
B. Example – If you had a HTA(Fixed Futures) contract in place for June delivery of corn that you had stored on farm or in elevator, but had not set the basis on it yet.
3. In the examples above, June delivery is just used as an example. As long as the contracts were not priced as of January 15th, you could have delivery anytime after that.
4. The only bushels that would not qualify for payment would be bushels that you had been paid on or had set a price on prior to January 15th.
A. Example – If you had a contract in place for June delivery of corn and the basis and futures price had been established.
5. APPLICATIONS are not being taken until MAY 26, 2020.
** The above explanations are only my interpretations based on information I have read and discussed with certain officials. You should talk with your local FSA official before counting your $. Keep in mind this information is all new so there is a learning curve for your local agent, give them time to get trained***
We will be happy to help you with documentation needed to apply for this payment, but ask that you confirm with your local FSA agent to get details of exactly what you need to make everyones time more efficient.
Have a Safe Day!