The recent decline in cash corn and soybean prices across much of the Corn Belt means Loan Deficiency Payments (LDPs) are available for the 2006 crop.

History tells us that the largest corn LDP typically occurs in early harvest and soybeans late harvest. However, storage issues and Hurricane Katrina provide larger corn LDPs into mid-October to early November during the past 2 harvests. The largest soybean LDP for soybeans at harvest was only 5 cents per bushel in 2005.

Predicting the largest soybean LDP is much more difficult than for corn. Corn LDPs could disappear with improved basis late into the 2006 harvest. With corn ending stocks on September 1st expected to be over 2 billion bushels nationwide for corn and 500 million bushel for soybeans, storage could be tight at many elevators and co-ops.

With a wide harvest basis, Johnson anticipates corn LDPs to range from 0 to 20 cents and soybean LDPs slightly larger than corn and lasting through most of harvest.

However, don't rush to LDP all corn and soybean bushels. The ability to store crops into spring is noted from many market analysts, especially corn. Seasonal futures price trends reflect better likelihood of prices.

However, the cost of storing grain commercially can eat away at any basis improvement seen post-harvest. Producers are encouraged to develop LDP strategies that reflect their own cash flow needs. Such as the following:

Determine your cash flow needs for 2 time frames: Short-term: September to Mid-March Long-term: Mid-March on

Match bushels in storage to cash flow needs: Commercial/On-Farm Temporary- Short-term On-Farm Storage -Long-term

Take the LDP at harvest on bushels: To Feed Sold Pre-Harvest Sales Planned for Fall/Early Winter

Use the FSA Marketing Loan on bushels: Soybeans - 60-day lock-ins Long-term cash flow Corn - Expand your marketing window Long-term cash flow

The recent decline in cash corn and soybean prices across much of the Corn Belt means Loan Deficiency Payments (LDPs) are available for the 2006 crop.