News & Media

Market Briefs for September 12, 2019

USDA Announces Enrollment for 2019 and 2020 ARC and PLC
USDA has announced an enrollment period for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. Eligible producers can make an appointment with their Farm Service Agency office to sign up between September 3, 2019, and March 15, 2020, to enroll for 2019. Enrollment for 2020 will begin on October 7, 2019, meaning producers waiting until that date can sign-up for two years at once.

Farm owners have a one-time opportunity to update PLC payment yields that take effect beginning with crop year 2020. Producers who elect PLC have the option of purchasing Supplemental Coverage Option (SCO) through the USDA Risk Management Agency, but producers who elect ARC are ineligible for SCO. Upland cotton farmers who choose to enroll seed cotton base acres in ARC or PLC are ineligible for the stacked income protection plan (STAX) on their planted cotton acres.

Texas A&M University has a decision-making tool that will help farmers analyze payment yield updates and expected payments for 2019 and 2020. The tool can be found at the following address:

Dairy Margin Coverage Signup Deadline September 20
The deadline to enroll in Dairy Margin Coverage (DMC), the 2018 farm bill’s improved replacement for the Margin Protection Program, is September 20, and USDA is reporting that approximately 50% of the nation’s dairy farmers have yet to sign up for the program.

DMC is a voluntary insurance-style program that makes payments when the national average income-over-feed-cost margin falls below a famer-selected coverage level. Coverage is available from $4 per cwt to $9.50 per cwt in Tier I, and up to $8 per cwt. in Tier II. Dairy producers pay premiums for coverage, with premium rates rising in step with the level of protection. Program payments, which may be triggered monthly, are made if the DMC margin falls below the farmer’s elected coverage level. Program payments are based on the amount of milk covered in the program and may range from 5% to 95% of a farm’s milk production history in 5% increments. Tier I covers up to 5 million pounds of milk, while Tier II covers any milk over the first 5 million pounds.

USDA has created a decision tool for farmers to use in order to estimate indemnities on his or her farm, which can be found at this link:

September Reports Hold Mostly Positive News for Markets 
USDA released the crop production report and the Supply/Demand report on Thursday, with mostly favorable numbers. News of a potential interim trade deal with China was also seen as a positive, reflected in sharp gains in cotton and soybeans particularly.

USDA cut the forecast for 2019 cotton production by 660,000 bales thanks to lower acreage and a lower average yield. However, U.S. carryout was unchanged at 7.2 million bales as the export projection was cut by 700,000 bales. The projected on-farm price for cotton for 19-20 was further lowered to an average range of 58-60 cents per pound. December cotton posted sharp gains on Thursday, but found resistance at the chart gap between 62.17 and 62.25 cents.

Soybean production was down from last month, although maybe not as much as analysts were expecting. The September report pegged production 3.633 billion bushels on a yield of 47.9 bushels per acre. 19020 carryout was pegged at 640 million bushels, down from 755 million in the August report. The average on farm price was estimated to be $8.50, up a dime from the August report.  November beans posted sharp gains Thursday, but found resistance at the recent high of $8.96 ¾.

The rice production estimate was slashed by 8.8% from the August report on lower acreage. USDA now says 2.477 million acres will be harvested in the U.S., 1.126 million in Arkansas. Production is now estimated to be 187 million cwt, on an average yield of 7,563 pounds per acre. That resulted in U.S. carryout for the marketing year being cut to 11.4 million cwt.

USDA increased their 2019 milk production estimate by 1 billion pounds this month, bringing total production to 218 billion pounds. The 2020 total is pegged at 221.1 billion pounds. Price estimates were also raised. Class III prices to $16.45 per cwt for 2019, while the estimate for 2020 was up 50 cents to $17.05.

Optimism sparked by renewed talks of a trade agreement between the U.S. and China resulted in hog futures opening limit-up on Thursday, but some confirmation will likely be needed for the market to hold onto gains, as the cash hog market remains weak as a result of more than ample supplies.