September 18, 2020 | FBN Insights | Kevin McNew

President Announces New Farm Relief

CFAP2, the new round of assistance, comes in at about $13B

President Announces New Farm Relief

  • President Trump announced a new round of Covid-19 pandemic assistance to farmers of about $13 billion.
  • The agriculture department is expected to release details later today for Coronavirus Food Assistance Program Part 2 (CFAP2).
  • The program taps into the $14 billion in additional Commodity Credit Corporation funds that Congress agreed to prepay as part of the CARES Act.
  • Payments will likely be designed similarly to the earlier CFAP; calculated based on yields and the impact the pandemic had on the price of each crop.
  • Farmers are expected to be allowed to start applying for the new program on Monday September 21.
  • This new package adds to the $19 billion relief program announced in April, separate from the $28 billion of trade aid in 2018/19.

FBN’s Take On What It Means: The administration is following through on its promise of continued farm relief in the runup to November’s election. China's strong demand for US corn and soybeans has recently boosted prices, and depending on the program's details, this may affect payment calculations. 

Weekly Export Sales Stay Strong

  • Soybean sales for the week ended September 10 were very strong again at 90.3 million bushels, following the previous week's 116.2 million bushels. 
  • New sales to China of 45.6 million bushels brings their reported sales to 639.3 million bushels compared to 19.5 million at this time last year.
  • Corn sales of 63.3 million bushels were at the high end of expectations. 
  • Net sales to China were only 8.7 million bushels, but there were also 24 million bushels in new sales to “unknown destinations.” 
  • China now has 362.2 million bushels of corn on the books for the current marketing year.
  • Wheat sales were disappointing at 12.3 million bushels, among the lowest sales of the first 15 weeks of 2020/21.
  • Upland cotton sales of 519,600 running bales were up noticeably from previous weeks with increases primarily for China of 440,100 RB.

FBN’s Take On What It Means: China’s buying surge continues with wheat being the exception. US wheat remains uncompetitive to most world importers. China left low tariff rate quotas (TRQ) for corn and wheat unchanged, though there are reports that special exemptions can be made. This will likely be the case as China has already purchased 9.2 million tonnes of US corn compared to a TRQ of 7.2 million tonnes. 
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