How much in additional government payments will I get on last year's corn and soybean crops and when will I get them?” asked a frustrated Illinois farmer at a recent seminar.

He was frustrated that, despite good yields, income is stable at best. Most farmers are getting a lot less in government payments than they did last year, and, with higher production costs, profits have been hard to come by.

My initial estimates for the farmer — about 2¢ on corn and 6¢ on soybeans — appear to be very close to what we can project today. As I write this, we are entering the critical time when weather causes increased price volatility. Any major price swing, up or down, can change these Counter-Cyclical Payment (CCP) projections.

Here are some program specifics corn and soybean farmers need to be aware of, not only this year, but also for the crop they are producing this year.

The target price for corn is \$2.60/bu. When you deduct the 28¢/bu direct payment, the real payment guarantee is \$2.32/bu. With a \$1.98 national loan rate, the maximum CCP is 34¢/bu. If corn prices go below loan, corn farmers could collect a Loan Deficiency Payment (LDP) on the corn for which they still have controlling interest.

For soybeans, the key number is the target at \$5.80. When you deduct the 44¢ payment, the real price guarantee is \$5.36/bu. With a \$5 loan, the maximum CCP is 36¢/bu for soybeans. If soybean prices drop below loan, then producers are eligible for LDPs.

Computing the CCP is like shooting at two moving targets going in opposite directions. We need to estimate an average farm selling price and what percentage of the crop U.S. corn and soybean farmers have sold that month.

USDA computes the CCP by taking the average farm selling price multiplied by the historic percentage sold each month during the marketing year. If that yearly average selling price adds up to \$2.32 for corn, no CCP will be made for corn. If the yearly average selling price for soybeans adds up to \$5.36, no CCP will be made for soybeans.

The two tables at left show not only the USDA data available, but also our estimates of average farm price and the CCP year-to-date, including January 2003. These estimates could be 1-2¢ off, and the final payment will change based on what corn and soybean prices do this spring and summer.

What to do: For 2002-crop corn and soybeans, our recommendation has been to have a minimum 60% sold. Many of our Northstar subscribers are 100% priced out.

Ownership is currently maintained with August soybean call options. As the tables show, most corn and soybean income will come from the marketplace because very little additional CCP will come from the government.

If corn moves 10-15¢ higher, plan to take cash sales up to a minimum of 80%. If soybeans reach \$5.80-6/bu, May futures would be the next target to have sold up to at least 80% of that crop. The next key period to consider both old- and new-crop sales is the first week of May.

If you want a more current Northstar projection on the 2002 CCP, e-mail: aginvestor@agmotion.com.

Alan Kluis is executive vice president of Northstar Commodity Investment Co. If you have marketing questions or want more information, write: Northstar, 1000 Piper Jaffray Plaza, 444 Cedar St., St. Paul, MN 55101; call: 800-345-7692 or e-mail: aginvestor@agmotion.com.