Counter-Cyclical Payments For 2006

USDA made no advance counter-cyclical payment (CCP) on either the 2006 corn or soybean crop in October, 2006, and will not make an advance CCP in February, 2007. If the 12-month national average pricefor 2006 corn on August 31, 2007, were below $2.35/bu., a CCP would be earned. Similarly for 2006 soybeans, a CCP would be earned if the 12-month national average price drops below $5.36/bu. by August 31, 2007. The maximum CCPs on the 2006 crop are $.40/bu. for corn, and $.36/bu. for soybeans. Based on the current average market prices for 2006 corn and soybeans, and the price projections for the coming months, no CCPs are likely on either.

Through the first four months (as of December 31) of the marketing year, the weighted average prices for 2006 are $2.67/bu. for corn, and $5.71/bu. for soybeans. USDA is estimating the 12-month national average price at $3.10/bu. for corn, and $6.10/bu. for soybeans, which means that USDA expects commodity prices for both corn and soybeans to stay strong in the coming months. The national average price in the next eight months (January-August, 2007) needs to be $2.12/bu. or lower for corn and $5.04/bu. or lower for soybeans in order to earn any CCP on the 2006 corn or soybeans.

CCPs for corn and soybeans are based on the national average price for that commodity from Sept. 1 in the year of harvest through August 31 the following year (crop-marketing year). The crop-marketing year for wheat and other small grains is June 1 in the year of harvest through May 31 the following year. The monthly average grain prices for each commodity are “weighted” for the volume sold each month, in order to determine the final 12-month national average price for a commodity. Based on past marketing practices, 55% of the corn and 63% of the soybeans are usually sold in the first five months of the marketing year, from September through January.

National Loan Rates For 2006 And 2007

National CCC crop loan rates for corn, soybeans and wheat in 2007 will be exactly the same as 2006 national loan rates. It is possible that county loan rates may be adjusted a few cents per bushel from 2006 to 2007, based on changes in differentials from the National loan rate for a given commodity. 2006 county commodity loan rates for all counties are available at the USDA FSA Web site at: http://www.fsa.usda.gov.

National Loan Rates for 2006 and 2007:
Corn: $1.95/bu.
Soybeans: $5.00/bu.
Wheat: $2.75/bu.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN.
You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.