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Seasonal woes

Agriculture.com Staff 02/06/2009 @ 11:42am

The February break is still in effect, despite Thursday's rally of 13 cents in the corn and 30 cents in the beans. Since the middle of January, there have been 50 cent price breaks. Today, the weather in Argentina has everyone on edge once again, including end users, as Argentina exports such a significant portion of their crops.

Thursday's export sales report showed strong end user buying of corn for the third straight week. In contrast, soybean sales were a marketing year low. However, there is quite a bit of market chatter that China continues to be interested in bean purchases after their New Year's holiday, which ended this past weekend.

New Farm Program

On a personal note, we have finally begun to dig into the provisions of the new Farm Bill. There are changes that require some thought and education. First, there are changes to the payment limit system. Then, there's the SURE program, the Farm Bill's version of a permanent disaster program. Finally, there's the ACRE program, another choice to consider, instead of the old system of direct and counter-cyclical payments.

We are not taking the time to explain any of these new wrinkles here. But, education is key to understanding these new choices. And we believe it takes at least two meetings before the ACRE program will make any sense! Yes, the government is good at creating complex choices.

Another problem is a disconnect between the crop year and the timing of any payments you may receive. Both the SURE program and the ACRE program are based on the USDA's national average price for the marketing year.

So, if your 2008 production suffered enough to get a SURE payment, you will not receive that until the fall of 2009 (a year after the disaster). ACRE payments are the same way-if you will receive a payment, it will be a year late. There are no advance payments-so cash flows will be difficult to predict.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

The February break is still in effect, despite Thursday's rally of 13 cents in the corn and 30 cents in the beans. Since the middle of January, there have been 50 cent price breaks. Today, the weather in Argentina has everyone on edge once again, including end users, as Argentina exports such a significant portion of their crops.

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