ARC Payment Maps and Cost vs Returns Charts - Monday, 10 October 2016

The falling crop prices have activated the safety-net programs of the USDA.  Many of the 1.7 million farms that chose to enroll in either the Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) will receive payments due to the decline in prices during the 2015 crop year.  The U.S. Secretary of Agriculture, Tom Vilsack said, “This fall, USDA will be making more than $7 billion in payments under the ARC-County and PLC programs to assist participating producers, which will account for over 10% of USDA’s projected 2016 net farm income.”  Across the nation 96% of base soybean acres, 91% of base corn acres and 66% of base wheat acres were enrolled in the ARC-County option.  99% of the long grain rice and peanut base acres and 94% of base medium grain rice acres were enrolled in PLC.  This brings the overall total enrollment of participating base acres to:

  • 76% - enrolled in ARC-County
  • 23% - enrolled in PLC
  • 1% - enrolled in ARC-Individual

 

 

Demand for U.S. corn remains strong.  Weekly export numbers were much higher than expected due in part to an enourmous sale of 1.577 MMTs to Mexico.  Some traders also believe that the USDA has over shot their 2016 yield estimate but there are also many that think that acres may need to be increased by +500,000-700,000 acres.  If this is the case the drop in yield could likely be wiped out by the increase in acres.

CONAB announced some rather alarming news last week regarding acres in Brazil.  The group is estimating that producers in Brazil will be growing their corn production considerably from the past growing season.  During the latest season producers raised 66.7 MMTs while this season they expect to see between 82.3 and 83.8 MMTs.  In addition Argentina and Ukraine are planting more acres.

Kevin Van Trump of the Van Trump Report analyzes the data like this, “ When the market deems itself to be in an oversupplied environment, wich currently seems to be the case, its job becomes to inflict enough pain on the highest-cost producers to drive them out of the business….The good news is as the world becomes more dependent on production from extremely volatile nations like Argentina, Russia and Ukraine, there’s a very strong and increased chance of experiencing a major geopolitical or logistical hiccup in the supply chain.  These hiccups, complications and uncertainties, along with weather problems will hopefully provide us with the opportunties to market portions of our production at profitable margins.”

 

With corn production increasing in South America the hope is that there will be less growth in soybeans acres especially in Argentina.  Unless weather delays occur sources in Argentina expect soybean production could fall by -2 to -4 MMTs from last year.

The USDA will announce their Supply and Demand report this Wednesday, October 12th.  FSA will also release their Acreage numbers that day as well.

The charts below released on October 3rd, show the production costs/returns for the past 5 years for the 3 major field crops.  These estimates are released annually during the first week in May and the first week in October.  Cost of Production Forecasts are also available for major U.S. crops in Mid-June and Mid-December.  All of the data is gathered from producer surveys.

The precipitation map below estimates the rainfall expected across the nation from yesterday, October 9th through this next Sunday, October 16th.

 

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