Counter-Cyclical Payment Details

Counter-cyclical payments (CCP) 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 to determine the final 12-month national average price for a commodity.

If the 12-month national average price for a commodity is lower than the target price for that commodity minus the Direct payment rate for that commodity, a CCP is earned. The maximum CCP is earned once the national average price for that commodity is at the national loan rate or lower for the commodity.

Timing Of CCP Payments
After Oct. 1 – Up to 35 percent of the projected CCP payment for a given crop marketing year. (Harvest Year) (Sept. 1-August 31 for corn and soybeans).

After February 1 – Up to an additional 35 percent of the projected CCP payment. (Year after harvest)

After October 1 – Final CCP payment based on final 12-month national average price. (Year after harvest) NOTE – It’s possible that repayment of the Advance Counter-Cyclical payments (October and February) could be required the following October, if the 12-month final national average price is too high to justify the advance CCP payments that were made during the year.

Expected CCPs For 2005 Corn And Soybeans
The University of Illinois has an excellent on-line resource to follow estimated counter-cyclical payments (CCPs) from month-to-month during the crop marketing year. The Counter-Cyclical Payment Tool is available at the following web site: http://www.farmdoc.uiuc.edu/marketing/CounterCyclical/CCP.asp

It appears likely that farm operators will get to retain all of the 28¢/bu. advance CCP, which they have already received on the 2005 corn crop, unless we have a very sharp rise in corn prices in the next 2-3 months. It is possible that there could be a small final CCP (up to 12¢/bu.) on 2005 corn in October, 2006 (after the 2005 marketing year ends on Sept. 30). There is almost zero chance of there being any final CCP on 2005 soybeans.

Editors 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.