USDA this week announced its final counter-cyclical payments for the 2004 corn and grain sorghum crops. The payment rates will be 29 cents a bushel for corn ... and 27 cents a bushel for grain sorghum. Soybean producers will N-O-T receive counter-cyclical payments for their 2004 crop, since the so-called "effective" price exceeded target prices.
The counter-cyclical payments are just part of a complex formula that helps farmers build profitability. The basis for that formula starts with raw data on a commodity, some of which were estimated this week by private grain analysts.
The 2005 corn and soybean crops keep growing larger with almost every new estimate released. Private estimates this week for corn are well above the 10.638 (B) billion bushel estimate the USDA reported in September.
FCStone estimates the corn crop at 10.980 (B) billion bushels, with an average yield of 147.6 bushels per acre. Informa estimates corn at 10.970 (B) billion bushels, with yield of 139.6 bushels per acre.
For soybeans, FCStone projects a crop of 3.105 (B) billion bushels, with an average yield of 43.0 bushels an acre. Informa estimates the bean crop at 3.0 (B) billion bushels. Both estimates are well above the September USDA number of 2.856 (B) billion bushels.
The larger than expected crops don't seem to be drastically affecting prices. By late in the week, corn futures traded slightly lower. And soybean futures were marginally pressured as traders continue to consolidate recent lows.
Some analysts point to the fact that every time there is a yield increase in the October report, the futures have taken out the September lows.
Others fear if the crops end up as large as the estimates, it may be difficult to get prices above the loan rate over the next 12 months.
USDA will release its crop estimates next week.