Agribusiness Report: Low Crop Prices Expected To Increase Farm Payments

Published: Mar. 8, 2016 at 6:34 AM CST
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With low commodity prices steady for the last year, payments under the ARC and PLC programs are opening up.

Since July, corn prices have gone down 15 percent and soybeans have decreased 10 percent.

USDA Ag Secretary Tom Vilsack says with that loss in price he expects payments this year to be higher than the last, which was $5.2 billion in payments to 900,000 producers, or about 45 percent of U.S. farmers.

But at the Commodity Classic last week Vilsack says there's more that can be done, "There are always tweaks to the system. I think we still have to give some farmers some flexibility in terms of the counties they select from an administrative standpoint. I think in a new program you have to have enough flexibility when someone realizes they may have made a mistake about which county they designated."

Vilsack says he understands the concerns of how county averages are established. He says there has to be a system and he thinks the best way is to look at the National Agricultural Statistic Service numbers, if that's not available then Risk Management Agency numbers, then checking out the state committees.

The weekend was very kind to the grain markets, showing some signs of life in what has been a very stagnant market.

U.S. Secretary of Agriculture Tom Vilsack says it comes after last weeks technical improvements in the chart pattern.

"Turned a little bit positive," said Vilsack. "The fundamentals remain negative. The wheat market's getting a little bit of short covering from that time of year. It's a little bit dry in about a third of the winter wheat area. We do have wheat out at dormancy so all eyes are on if we get a cold snap. So we're starting to switch the overall focus from South America to the U.S. weather and planting.

"The cattle market just continues to struggle at the top end of the range. It's the discounts of the futures to the cash that's supporting us on breaks. And seasonally we put our highs in an April. So the belief is we have some higher prices ahead of us even if we get a setback right now."

"The hog market is starting to look forward to the Easter time frame looking for the demand on hams to pick up a bit. We expect that inventories will be up slightly on the report but the market this time of year is really just on hold. Just seeing a setback here just with the weaker cut out just in the last few days."

The Colfax Sheep and Goat Auction on Saturday saw 257 head of sheep Feeder lambs fetched the days high average price of $2.44 per pound, while fed lambs averaged $1.37 per pound. A lighter run of 41 goats at the auction saw a high average price ranging from $95 to $230 per head.

The U.S. Agriculture Coalition for Cuba called on Congress to remove trade barriers with Cuba at last week's Commodity Classic. The coalition says doing so would let agriculture capture sales of the nearby nation.

The Grains Council says in 2015, just $4 million of a $160 million worth of corn sold to Cuba was sourced from the United States. An estimated $240 million of business on top of that was lost by U.S. farmers with Cuba neighbors.