USDA released last week the 2017 Marketing Year Average (MYA) price for long- and medium-grain rice. The MYA price for long-grain was $5.175 per bushel and $5.265 per bushel for medium-grain. The 2014 Farm Bill provides for payments for covered commodities enrolled in PLC when the MYA price is below the Reference Price, which is $6.30 for both long- and medium-grain. Payments are decoupled from actual production and made on 85% of base acres, using either 90% of the on-farm yield or 75% of the county yields from 2008-2012. Payments are subject to a $125,000 payment limit and also subject to sequestration. That makes the payment rate $1.05 per bushel for long-grain and 96 cents per bushels for medium-grain. Farmers should expect payments to arrive in November 2018.
Futures prices have recovered a great deal of losses charted the last week of October. January will have resistance at $11 and $11.25 on the rebound. The crop is now in the bins, and yields were solid. USDA did revise the national average yield downward in the October report to 7,539 lbs/acre, down from 7,563 lbs/acre in the September report. Demand remains lackluster, and that could keep a lid on prices considering the size of the crop. Weekly export sales were a dismal 46,700 metric tons, which included a previously reported tender of 30,000 metric tons to Iraq.
Soybeans continue to be plagued by trade concerns. Exports to China are down 92% from a year ago. While some of the supplies that would have been expected to be sold to China have gone to other countries, U.S. exports are down 21%, or 200 million bushels compared with last year. Farmers in Arkansas have been plagued with huge discounts due to poor seed quality. Hot, dry conditions in the summer, and then extreme moisture that has delayed harvest has contributed to the seed quality. As of November 4, Arkansas farmers have harvested 72% of the crop, compared with a 5-year average of 89%. As of October 21, the most recent crop condition rating, 21% of the Arkansas crop was in poor to very poor condition, and another 31% was in fair condition.
The Bipartisan Budget Act of 2018 made cotton producers eligible for Title I farm programs by designating seed cotton as a covered commodity. Producers who have generic base and who want to participate in the Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) program for the 2018 crop must sign up by December 7, 2018.
Farmer owners with generic base acres and recent planting history of covered commodities have a one- time opportunity to allocate all the generic base acres on their farm. Farms with generic base that were planted or approved as a prevented planted commodity during the 2009-2016 crop years are eligible to allocate generic base acres using one of two options. For farms without planted or considered planted history of covered commodities, including upland cotton, during the 2009-2016 crop years, all generic base acres will be converted to unassigned base for which no benefits will be available.
Current farm owners have a one-time opportunity to update the farm’s payment yield for seed cotton with either retaining the Counter-Cyclical payment yield for upland cotton, as listed on the farm record as of September 3, 2013, multiplied by 2.4, or update the cotton yield to 90 percent of a simple average of the upland cotton yield per planted acres on the farm for years 2008-2012. The retained or updated yield becomes the PLC yield for the farm, effective for the 2018 crop year, and will only be used in calculating payment rates for the PLC program.
Following the generic base allocation and yield update, the current producer(s) on the farm will have a one-time opportunity to unanimously elect either ARC or PLC for seed cotton base acres resulting from the generic base allocation. Any farm that fails to make a unanimous election will be deemed to have elected PLC for acres allocated on the farm to seed cotton.
Texas A&M University has developed an online tool to help farmers with generic base make the best decisions for their individual farms, available here: https://www.afpc.tamu.edu/tools/cotton-base