Chicago | Reuters — U.S. corn futures dropped for the first time in nine sessions on Thursday after the U.S. Department of Agriculture (USDA) unveiled a farm aid package that could encourage farmers to plant more corn despite adverse weather this spring.
Soybeans and wheat also declined as the USDA announced a $14.5 billion direct payment program that ties payment rates to the number of acres planted (all figures US$).
Grain prices, especially corn, have risen in recent weeks as persistent rains and forecasts for continued wet weather has prevented spring planting across large swathes of the Midwest.
More farmers than usual had been expected to file claims this year for fields that they were unable to plant within a specified time frame because of the adverse weather via a farm insurance program known as prevented planting.
“The bottom line is that it gives you a disincentive to take prevented planting on anything because you don’t get paid if you don’t plant it,” said Charlie Sernatinger, global head of grain futures at ED+F Man Capital.
“It gives you an incentive for you to plant corn past your insurance date event though you’re going to lose a percent per day on the insurance coverage,” he said.
The Trump administration on Thursday unveiled a $16 billion farm aid package to offset losses from a 10-month trade war with China and said payment rates to farmers would be determined by where they farm and how much they plant rather than what specific crops they grow.
Chicago Board of Trade (CBOT) July corn fell 4-3/4 cents to $3.89-3/4 a bushel. The contract touched a high of $3.99 earlier in the session, matching Tuesday’s session high that was the highest for a most active contract since May 29, 2018.
July soybeans were down seven cents at $8.21-1/2 a bushel.
CBOT July wheat fell 2-1/2 cents to $4.70-1/4 a bushel.
Grain markets have been rattled by forecasts for heavy rain this week in parts of the U.S. Midwest and Plains. More showers are expected next week.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.