Details Released for U.S. Farm/COVID-19 Payments
- USDA released some details on payouts due to COVID-19 market losses.
- Payouts are triggered if there was at least a 5% decline between average prices from January 13-17 versus average prices from April 6-9.
- Non-specialty crops (corn, soybeans, HRS, durum) are eligible for payments.
- Payments are based on 50% of the smaller of 2019 production or January 15 crop inventories times the CCC and the CARES payment rates.
- Livestock (beef, hog, lamb) and dairy producers also are eligible.
- Signup begins May 26 with payments expected shortly after.
- There is an individual limit of $250,000 and a $16 billion limit in total.
FBN’s Take On What It Means: The payouts will help ease some of the economic hardships producers have faced recently, but are not expected to be a complete cushion. The key issue here is that supplies of corn and soybeans are hefty and with only a few months left before new-crop harvest, we need to work through stocks. For corn, ethanol production is picking back up. While for soybeans, crush remains solid but Chinese buying is lacking.
AgRural Reduces Brazil Corn Production Forecast
- Drier-than-normal weather conditions affected all major Brazilian corn producing regions, including Mato Grosso and especially Paraná.
- The consultant now projects Brazil will produce 66.7 million tonnes of safrinha corn versus the February forecast at 69.1 million and the March forecast at 67.9 million.
- They forecast Brazil's total corn production this year at 97.7 million tonnes, compared with 100 million 2018/19.
- The forecast is lower than Conab’s latest forecast of 102.3 million tonnes and USDA at 101 million.
FBN’s Take On What It Means: Brazil has not exported any corn yet in May. There are just 95,000 tonnes in the lineup to be shipped compared with 1.5 million tonnes at the same time last year. This has helped allow the US to narrow the gap in exports between this year and last season.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)
