Markets closed higher today on continued wet forecasts thru the weekend. This has led to a mass exit of the funds short position that they have been carrying for the last several months. Funds have reduced their short position in corn by over 250,000 contracts in the last two weeks. Corn is the only commodity they are getting out of at a rapid pace as they remain short 153,000 contracts in the bean market. There are no markets on Monday, so Tuesdays trade could be interesting depending on how the weather models look compared to todays. We will also get a planting progress update on Tuesday afternoon that is expected to jump into the 65-70% complete range. While this may be behind normal, it would be a number that should slow the markets climb.
Yesterdays USDA announcement(info below) is going to result in alot more acres getting planted to some commodity this year that may have went to prevent plant previously. The exact $/acre have not been confirmed, but some analysts are projecting that the payment will be close to $50/acre.
The USDA announced a support program yesterday for farmers impacted by “Unjustified Retaliation and Trade Disruption”. Here are the details:
“Market Facilitation Program (MFP) for 2019, authorized under the Commodity Credit Corporation (CCC) Charter Act and administered by the Farm Service Agency (FSA), will provide $14.5 billion in direct payments to producers.
Producers of alfalfa hay, barley, canola, corn, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, upland cotton, and wheat will receive a payment based on a single county rate multiplied by a farm’s total plantings to those crops in aggregate in 2019. Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions. Moreover, total payment-eligible plantings cannot exceed total 2018 plantings.
Dairy producers will receive a per hundredweight payment on production history and hog producers will receive a payment based on hog and pig inventory for a later-specified time frame.
Tree nut producers, fresh sweet cherry producers, cranberry producers, and fresh grape producers will receive a payment based on 2019 acres of production.
These payments will help farmers to absorb some of the additional costs of managing disrupted markets, to deal with surplus commodities, and to expand and develop new markets at home and abroad.
Payments will be made in up to three tranches, with the second and third tranches evaluated as market conditions and trade opportunities dictate. The first tranche will begin in late July/early August as soon as practical after Farm Service Agency crop reporting is completed by July 15th. If conditions warrant, the second and third tranches will be made in November and early January.
Additionally, CCC Charter Act authority will be used to implement a $1.4 billion Food Purchase and Distribution Program (FPDP) through the Agricultural Marketing Service (AMS) to purchase surplus commodities affected by trade retaliation such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk for distribution by the Food and Nutrition Service (FNS) to food banks, schools, and other outlets serving low-income individuals.
Finally, the CCC will use its Charter Act authority for $100 million to be issued through the Agricultural Trade Promotion Program (ATP) administered by the Foreign Agriculture Service (FAS) to assist in developing new export markets on behalf of producers.”
Reminder that there will be no markets on Monday.
Have a Safe Weekend!