After looking at the latest USDA price projections for corn, wheat, and soybeans, and taking into account price patterns for the crops, five university economists say the Price Loss Coverage subsidy is a better choice for growers than the Agricultural Risk Coverage subsidy for corn and wheat grown this year.
Three years of bumper crops collided with the Sino-U.S. trade war to create the largest U.S. soybean stockpile ever, a price-depressing 1 billion bushels at the start of this month. But by next Sept. 1, the so-called carry-over will be just two-thirds of its current size, estimated the USDA on Thursday.
For the first time since the 2014 farm bill was implemented, the USDA is giving farmers the option of changing enrollment between the insurance-like Agriculture Risk Coverage and the traditionally designed Price Loss Coverage subsidies.
Farmland values are falling for the fifth year in the Midwest, and one factor in the decline is “muted expectations for farm income” this year, said the Chicago Federal Reserve Bank on Thursday. “The profitability of many corn and soybean farms will almost surely fall from their 2018 levels — possibly by a lot for some.”
Agricultural lenders expect farm income, which weakened in the spring, to continue to decline this summer, although a recent rally in corn, soybean, and wheat prices will act as a stabilizer, said Federal Reserve banks in Kansas City, Minneapolis, and St. Louis on Thursday.
Spring flooding in the northern Plains and western Corn Belt will have a marginal impact on corn and soybean plantings, according to a USDA survey of growers and initial tallies of flooded land. With normal weather and yields, there would be limited impact on production of the two most widely grown U.S. crops, thanks to the huge amount of cropland nationwide.
The United States is awash in soybeans, the result of the trade war with China and a string of bumper crops. But although farmers were expected to respond by planting more corn this year while cutting back sharply on soybeans, it's no longer clear that this rush to corn will actually occur.
The White House is looking for additional progress in negotiations this week to resolve the Sino-U.S. trade war even as it cautions that “much work remains.” Agriculture is among the structural issues under discussion, according to the administration.
After hitting a pothole in 2018, U.S. net farm income will recover this year under the combined effects of financial belt-tightening and rising crop prices, said the USDA on Thursday. It projected net farm income of $77.6 billion in 2019, which would be the highest total since the commodity boom collapsed in 2014.