Central European countries are trying to thrash out a deal with Brussels on EU-wide measures to help agriculture after some of them unilaterally introduced import bans on Ukrainian food products.

“What the EU is offering us is offered with a delay, it is too little, a drop in the ocean of needs,” Mateusz Morawiecki told a news conference.

Several central European countries became transit routes for Ukrainian grain that could not be exported through the country’s Black Sea ports because of Russia’s invasion in February 2022.

Bottlenecks then trapped millions of tons of grains in countries bordering Ukraine, forcing local farmers to compete with an influx of cheap Ukrainian imports.

The European Commission has offered 100 million euros (C$148.8 million) of aid for central European farmers in addition to an earlier 56 million-euro package.

It has also said it will take emergency “preventive measures” for wheat, maize, sunflower seeds and rapeseed, but the central European states want this list to be widened to include products including honey and some meats.

On Friday, the Polish government approved measures including increasing the amount of excise duty farmers can have refunded on diesel to 1.46 zlotys (47 cents Cdn) from 1.2 zlotys.

Morawiecki said the government would also ask the European Commission to give it permission to raise the amount that can be refunded to two zlotys. It will also pay subsidies to ensure farmers get a minimum price of 1,400 zlotys per ton of wheat.

— Reporting for Reuters by Alan Charlish and Pawel Florkiewicz.

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The Depression-era program of up to $30 billion in annual funding was tapped by the Trump administration to distribute billions of dollars in aid to cover farmers’ lost sales due to trade wars, primarily with China (all figures US$). Now it could help advance a Biden policy priority: combating climate change.

The CCC funds could be used to create a market to trade carbon or help farmers adopt sustainable agriculture practices, Vilsack said during his Senate confirmation hearing. Those green programs could then be incorporated and expanded in future farm bills, he said.

“It is a great tool for us to create the kind of structure that will inform future farm bills about what will encourage carbon sequestration, what will encourage precision agriculture, what will encourage soil health and regenerative agricultural practices,” Vilsack said.

Biden has already signed a raft of climate-related executive actions, including a pause on new oil and gas leases on federal land, rejoining the Paris climate accord and setting a target for reducing U.S. greenhouse gas emissions by 2030.

A handful of private projects launched recently by the likes of Cargill and Bayer have tried to compensate growers for sustainable agriculture practices. Many farmers, however, have been reluctant to make the shift due to high upfront costs for uncertain or minimal returns.

The CCC was established nearly a century ago and has the authority to borrow up to $30 billion from the U.S. Treasury to help stabilize and support farm income and agricultural product prices.

Farm subsidies soared under Trump, with farm aid packages and other government support schemes accounting for almost 40 per cent of farm income last year, a two-decade high.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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Many North American hogs had nowhere to go in spring as slaughter plants suspended production due to workers becoming infected with the novel coronavirus. While outbreaks among plant workers subsequently abated, infections recently flared in Maple Leaf Foods’ Brandon, Man. plant.

Canadian farmers who produce piglets — also known as isoweans or weanlings — face some of the greatest pressure to downsize. Many sell to U.S. farms who then fatten piglets to slaughter weight levels, but prices have fallen well below costs.

In July, Manitoba farmer Rick Bergmann sold 500 piglets to a U.S. buyer for $2.50 per head, recouping only the transportation cost.

“There are producers asking, ‘Do we want to stay in business?’ These are dark days,” Bergmann, chair of the Canadian Pork Council, said.

The council asked the Canadian government for aid this month, citing massive losses for western Canadian farmers and piglet producers especially.

U.S. buyers paid between $2.50 and $20 per Canadian isowean for the week ended Aug. 22, according to the U.S. Department of Agriculture, far below the roughly $40 cost to raise one.

“The weanling sector is the most volatile,” said livestock and meat analyst Kevin Grier. “When things are good, they have the wildest high prices and returns, and when things are bad, it’s just the opposite.”

There is little optimism that bottom lines will improve.

Western Canada’s hog prices are based on U.S. prices, which remain depressed, although they partly recovered this week.

U.S. farmers expanded too aggressively as new plants opened in recent years, resulting in more pigs being born than the industry could absorb, said Christine McCracken, animal protein analyst at Rabobank.

“Even before COVID, we had too many hogs,” she said.

The Canadian Pork Council’s most recent call for aid proposes a new tweak to the federal/provincial AgriStability income stabilization program.

AgriStability currently pays 70 per cent of the difference between a producer’s production margin in a given year and his or her reference margin, triggered when the former drops below 70 per cent of the latter.

While the council and other farm groups have previously called for the trigger to be restored to 85 per cent, but Bergmann, in an Aug. 12 letter to Canada’s federal and provincial agriculture ministers, said the cost of that proposal now appears to be a “barrier to movement” on program changes.

Rather, the council proposes to leave the trigger at 70 per cent but increase the program’s compensation rate to 85 per cent.

“It will increase payments by 20 per cent, but ensure those payments are only received by those facing substantial loss,” Bergmann wrote.

— Rod Nickel is a Reuters correspondent covering the ag and mining sectors from Winnipeg. Includes files from Glacier FarmMedia Network staff.

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Farmers have increasingly relied on aid from the U.S. government to survive during the past two years as exports have lagged throughout the U.S.-China trade war. But USDA Secretary Sonny Perdue said China will soon begin buying U.S. farm goods to meet the $40 billion in agricultural purchase agreements it made, alleviating growers’ need for more aid (all figures US$).

China, which typically buys the bulk of its U.S. agriculture products during the fall and early winter, will likely change the timing of its purchases, Perdue said.

“If China is going to achieve that, and we believe they are, we think they have to buy earlier than the traditional export season from the United States,” said Perdue, speaking at the American Farm Bureau Federation’s annual convention.

His remarks came one day after U.S. President Donald Trump addressed the convention, promising farmers that the deal will be good for them.

Washington and Beijing signed the pact on Jan. 15, though tariffs on major U.S. farm exports have not been removed and structural economic differences were not addressed.

Perdue said the third tranche of a $16 billion aid package announced in May will be paid to farmers “imminently,” but that they should not expect a 2020 aid package.

China bought roughly 60 per cent of U.S. soybean exports before the trade war and also was a major buyer of sorghum, dairy and pork.

Chinese Vice-Premier Liu He said Chinese firms will buy U.S. products, “based on market conditions,” raising doubts that the country will meet its commitments under the pact.

Growers are used to dealing with seasonality in the export program and could afford to wait without fresh trade aid, said Lane Osswald, 44, a farmer from Eldorado, Ohio.

“Everyone is prepared for the South American harvest to hit the market every year,” Osswald said.

Soybean futures have dropped 1.3 per cent since the trade deal was signed.

The China deal, and the recent passage of the United States-Mexico-Canada Agreement, will allow farmers to prosper, Perdue said.

Trump gained support among U.S. farm families at the end of 2019, a Reuters/Ipsos poll data showed, as Trump touted the trade deal ahead of its signing. Farmers broadly voted for Trump in 2016.

— Mark Weinraub is a Reuters commodities correspondent based in Chicago.

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Washington and Beijing signed the Phase One pact on Wednesday, setting trade tensions between the two economic giants on pause, though some major outstanding issues remain.

Washington has paid two out of three parts of a $16 billion aid package announced in May to compensate farmers for losses sustained during the 18-month trade war, and the third had been expected in January (all figures US$). China imposed tariffs on imports of U.S. agricultural goods and other products in retaliation for U.S. tariffs on Chinese goods.

The Trump administration had already spent $12 billion in trade aid for farmers in 2018. Perdue told Bloomberg in an interview that farmers should not expect a new bailout package this year, beyond the $28 billion already approved.

The U.S. Department of Agriculture did not immediately respond to request for comment on the interview.

In the Phase One trade agreement, China committed to buying an average $40 billion in agriculture goods this year and next, up from $24 billion in 2017 before the trade war.

The agreement did not remove China’s tariffs on key U.S. agricultural exports such as pork and soybeans, and many U.S. farmers have said they will need more assistance from the government to stay in business.

China bought roughly 60 per cent of U.S. soybean exports before the trade war and was a major buyer of sorghum, dairy and pork.

Chinese Vice-Premier Liu He said on Wednesday that Chinese companies will buy U.S. products “based on market conditions.” His comment increased skepticism of the deal and sent March soybean futures to a one-month low on the Chicago Board of Trade.

— Reporting for Reuters by Tim Ahmann and Eric Beech; additional reporting by Mark Weinraub in Chicago; writing by Makini Brice.

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Both farmers’ sales have taken heavy blows in Trump’s trade war with China. Neither understands why the U.S. Department of Agriculture (USDA) is giving Hagood so much more than Jensen — who grows the nation’s most valuable agriculture export crop, of which China had been the biggest buyer.

“I’m grateful,” Hagood, 64, said of the aid. “But honestly, I’m not sure anyone really understands how this is working right now.”

Certainly not Jensen: “It makes no sense,” she said, noting that soybean farmers in other counties have also been paid much more than her.

At Trump’s direction, the U.S. Department of Agriculture has rolled out $28 billion in trade aid for farmers over the past two years — $12 billion last year and another $16 billion announced this July and being disbursed now (all figures US$).

The widely varying payouts in the second round have confused and irritated farmers nationwide, according to Reuters interviews with more than three dozen growers. Farmers also complained of software problems and poor training of local USDA employees, who have struggled to process applications and payments, farmers and government workers said.

USDA acknowledged “glitches” in the application process in a statement to Reuters and said it was working to speed approvals and payments.

The differing compensation rates result from changes in the USDA’s complex farm-aid formula as the White House struggles to appease farmers — a key voting bloc for Trump — who have seen their incomes fall in the trade war. Farmers have been among the hardest hit by retaliatory Chinese tariffs. Shipments of soybeans to China, for instance, dropped to a 16-year low in 2018.

In the first $12 billion of trade aid, farmers were paid by crop, based on estimated lost sales to China: $1.65 per bushel for soybeans; one penny for corn, which was not widely sold to China in 2017; and six cents per pound of cotton. The paltry payouts for corn, cotton and other crops infuriated farmers growing them, who argued USDA paid soybean farmers at their expense.

Payments to corn and cotton farmers are expected to surge under the second round of aid. Estimated payouts to corn growers, when averaged across all U.S. counties, are 14 times higher than in the first round of aid, according to a USDA explanation of its methodology. Cotton producers’ payments quadrupled.

Instead of paying different rates according to crops grown, the new methodology pays farmers based on the estimated impact of trade policy on all agriculture in their county — regardless of what an individual farmer plants.

Another twist: The estimated impacts on particular counties are based on their export potential over the last 10 years — long before the trade war started. USDA said it needed to look at a bigger time frame to calculate potential trade-related losses. USDA also said it was trying to avoid influencing planting decisions — such as farmers switching to soybeans in hopes of a bigger trade-aid check.

The agency also acknowledged, however, that some aspects of the new formula were crafted to make up for errors perceived to have short-changed certain farmers in the first round of aid.

“There were a number of factors from last year’s programs that we wanted to correct,” USDA chief economist Rob Johansson said in a July call with reporters.

Hagood is on the board of directors for the Texas Farm Bureau. He said he attended meetings with regional USDA officials, who said that areas that grow primarily cotton were paid more per acre in part because USDA wanted to “make up for how little they paid cotton farmers” in the first round.

Jensen, 43, and her family grow soybeans in Minnesota’s Marshall County, about 50 km south of Canadian border crossings near Emerson and Piney, Manitoba. Before the trade war the beans were sold predominantly to the Chinese export market, like most of the soybeans grown on the northwestern edge of the Midwest farm belt.

USDA tried hard to make the payouts equitable, the agency’s secretary, Sonny Perdue, said in a statement last month. “We did everything we could to accommodate everyone,” he said.

Computer crashes, unanswered questions

In addition to confusion over varying payouts to farmers, the second wave of aid has been beset with administrative problems that have slowed processing of applications, farmers and government workers said.

Farmers reported crashing computer systems and poor training of workers handling their applications. Farmers also said they could not get satisfactory explanations for why payment rates vary widely by county — between $15 and $150 an acre.

In a statement to Reuters, USDA confirmed there have been problems with the software used to enroll farmers in county Farm Service Agency offices, which are implementing the new program. It blamed training deficiencies on the limited time the agency had to prepare.

Perdue unveiled the latest aid program details on July 25. USDA said it trained all state and county field offices but that there was not enough time “to address all questions and scenarios prior to July 29,” the day it started accepting applications. The agency said it encountered and adapted to similar issues in the first round of aid last year.

At one USDA Farm Service Agency office in Iowa, employees compiled a homemade cheat-sheet for lack of guidance from Washington, according to a worker there who spoke on condition of anonymity. The worker said staff spent 90 minutes training one day before the program rolled out, but still didn’t know how to answer many of the farmers’ questions.

For Minnesota grain farmer Mike Ingvalson, 41, the latest aid round should bring in about $19,000 for his family’s farming operation, which amounts to about a 10th of their farm income this year. But he keeps running into problems when he tries to apply.

The first time he went into his local USDA office, the computer program crashed. On a second visit, staff couldn’t process his application. Ingvalson will be paid three different rates for growing the same soybean and corn crops in four different counties — but no one has told him why.

“I can’t get a straight answer about anything right now,” said Ingvalson.

— P.J. Huffstutter reports on agriculture and agribusiness for Reuters, based in Chicago.

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The industry here — on the far northwestern edge of the U.S. farm belt, close to Pacific ports — spent millions on grain storage and rail-loading infrastructure while boosting plantings by five-fold in 20 years.

Now, as the world’s top soybean importer shuns the U.S. market for a second growing season, Dakota farmers are reeling from the loss of the customer they spent two decades cultivating.

The state’s experience underscores the uneven impact of the U.S.-China trade war across the United States. Although China’s tariffs target many heartland states that, like North Dakota, supported President Donald Trump’s 2016 election, those further south and east are better able to shift surplus soybeans to other markets such as Mexico and Europe. They also have more processing plants to produce soymeal, along with larger livestock and poultry industries to consume it.

For North Dakota, losing China — the buyer of about 70 per cent of the state’s soybeans — has destroyed a staple source of income. Agriculture is North Dakota’s largest industry, surpassing energy and representing about 25 per cent of its economy.

“North Dakota has probably taken a bigger hit than anybody else from the trade situation with China,” said Jim Sutter, CEO of the U.S. Soybean Export Council.

In its second-quarter agricultural credit conditions survey this month, the Federal Reserve Bank of Minneapolis said 74 per cent of respondents in North Dakota reported lower net farm income.

China shut the door to all U.S. agricultural purchases on Aug. 5 after Trump intensified the conflict with threats to impose additional tariffs on $300 billion in Chinese imports, some as soon as Sept. 1 (all figures US$).

Some farmers were relying on the Trump administration’s $28 billion in farm aid payments to compensate them for trade war losses, only to be disappointed with new payment rates for counties in North Dakota.

The rates are below those for some southern states that rely much less on exports to China. The U.S. Department of Agriculture determined other states had a higher “level of exposure” to tariffs than North Dakota because they also grow other crops, such as cotton and sorghum, that were hit by Chinese tariffs, according to a brief written statement from the USDA in response to questions from Reuters.

With record soy supplies still in storage and another crop to be harvested soon, farmers in the U.S. soybean state with the best access to ports serving China are unable to sell their crops at a profit.

Rail shippers would normally send more than 90 per cent of the North Dakota soybeans they buy to Pacific Northwest export terminals. Now they are trying unsuccessfully to make up the shortfall by hauling corn, wheat and other crops with limited demand. Some are moving soybeans south and east to domestic users, a costlier endeavour that ultimately thins margins for both shippers and farmers.

Lost demand

Soy farmers who planted this spring — when the White House was talking up a nearly finished trade deal with China — watched as those trade talks collapsed in May, sending prices well below their costs of production.

Vanessa Kummer’s farm at Colfax, N.D., about 50 km south of Fargo, has yet to sell a single soybean from the fall harvest because of the low prices. Normally, the farm would have forward-sold 50 to 75 per cent of the upcoming harvest.

She fears the U.S.-China soy trade is now “permanently damaged” as China shifts its purchases to Brazil, uses less soy in animal feed and consumes less pork as African swine fever kills of millions of the nation’s pigs.

“It will take years to get back to any semblance of what we had over in China,” Kummer said, standing in a sparse field of ankle-high soy plants, where two weeks earlier she hosted a delegation of soy importers from Ecuador and Peru.

Though it is the No. 4 soy state overall, North Dakota is home to two of the top three U.S. soy producing counties in the nation.

Options for North Dakota farmers are limited. U.S. wheat has been losing export market share for years. Demand for specialty crops such as peas and lentils, which grow well in the northern U.S., has been dampened by retaliatory tariffs imposed by India, a major importer of both products.

Roots of dependence

North Dakota’s farmers never set out to become so dependent on a single buyer of one crop. But with wheat profits shrinking and Chinese demand for soy growing, soybeans increasingly seemed like the obvious choice.

Companies including Berkshire Hathaway’s BNSF expanded rail capacity to open up a West Coast shipping corridor, and Pacific Northwest seaports expanded to handle more exports to China. Seed companies offered North Dakota farmers new varieties that allowed soybeans to thrive in the state’s colder climate and shorter growing season.

A $200 million crop two decades ago blossomed into a $2 billion crop, topping the value of wheat, once North Dakota’s top crop.

The number of high-speed shuttle train loading terminals in North Dakota tripled from about 20 in 2007 to more than 60 currently, according to industry data, with investments totaling at least $800 million.

But one of those facilities — CHS’s Dakota Plains Ag elevator at Kindred, about 30 km northwest of Colfax — has gone three or four months without loading a soybean train this year, said Doug Lingen, a grain merchant there. Normally the elevator would load at least one train a month with beans bound for the Pacific Northwest.

Limping along

The drop in demand has soybean prices in North Dakota trading at an historic discount to U.S. futures prices, and farmers are putting investments on hold.

Justin Sherlock, who grows corn, soybeans and other crops near Dazey, about 140 km northwest of Fargo, had been planning to buy a used grain drier this year for around $100,000-$150,000, passing on a new one that would be at least $350,000.

But an uncertain future has now shelved those plans, even with the latest promise for government aid. According to rates published last month, farmers in Sherlock’s county can apply for aid of $55 per acre, well below the maximum $150 rate offered in 22 counties nationwide.

Sherlock called the latest announcement “disappointing.”

“I’m just going to defer all my investment,” he said, “and try to limp along for a few years.”

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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The package, the bulk of which will be spent on direct payments, surprised growers and traders who had expected to learn separate payment rates for soybeans, hogs, corn and other crops in the Department of Agriculture (USDA) briefing.

Many farm groups welcomed the move, but called for a trade deal with China as soon as possible. Some Democrats have slammed the plan, calling it a ‘band-aid’ and said the county-based payment system could leave some farmers with reduced aid.

Farmers, a key constituency that helped carry U.S. President Donald Trump to his 2016 electoral win, have been among the hardest hit from a trade dispute with China, once a destination for more than 60 per cent of U.S. soybean exports.

“The farmers have been attacked by China,” Trump said in a press conference about the aid package. “But the $16 billion of funds will… make clear that no country has veto on America’s economic and national security,” he said.

The trade dispute, which escalated this month after Washington and Beijing hiked tariffs on imports of each other’s goods, has left U.S. farmers sitting on record volumes of soybeans with China halting purchases.

USDA officials said on Thursday they will roll out $14.5 billion in direct payments in three separate tranches with the first one planned for late July.

“The package we are announcing today ensures that farmers will not bear the brunt of those trade practices by China or any other nations,” Secretary of Agriculture Sonny Perdue said. “While farmers would tell you they’d rather have trade not aid, without the trade… they’re going to need some support.”

China, the world’s top soybean importer, curbed purchases of U.S. soy last year when Trump imposed tariffs on Chinese goods, prompting China to retaliate with tariffs on U.S. soy, pork, corn and other products.

An imminent trade deal between Washington and Beijing seems unlikely as the trade tensions between the world’s top two economies rose after U.S. placed China’s Huawei Technologies on a trade blacklist last week, triggering sharp protest from China.

Perdue also said the second and third tranches, with exact amounts yet to be decided, will be dependant on the progress in the trade talks and whether the U.S. will get a deal with China. The total package also includes $1.4 billion of support through food purchases and $100 million allocated to development of foreign markets.

Planting decisions

Perdue said USDA has redesigned last year’s aid program of up to $12 billion based on feedback. The new package therefore will have a single payment rate per county, calculated by the damages in that area, instead of a rate for every commodity across the nation.

“Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions,” USDA said in a statement.

Chicago Board of Trade corn futures turned lower and soybean futures extended earlier losses after the announcement.

The county-based mechanism for the aid payments have triggered a heated debate on whether it would impact planting decisions. Some analysts said the trade aid package could encourage farmers to try to seed their crops in order to qualify for the relief despite overly wet fields that have stalled planting this spring.

Jim Hefner, an Ohio farmer who has not been able to start planting due to heavy rain, said the plan could cause him to alter his initial acreage plans, however.

“I guess we would make more of an effort to get something planted,” Hefner said. “We may forgo corn and plant soybeans.”

Some farmers remain skeptical.

Dan Henebry, a corn and soybean farmer in Buffalo, Illinois, said the payments are directed at rural areas that helped propel Trump into office. Henebry, who voted for a third-party candidate in 2016, said he wants the president to end the trade war with China.

“If we solve the issue, we wouldn’t need this,” he said about the aid package.

— Reporting for Reuters by Humeyra Pamuk in Washington; additional reporting by Jeff Mason and Susan Heavey and Tom Polansek, Mark Weinraub, P.J. Huffstutter, Karl Plume in Chicago.

What’s in the aid package?

MarketsFarm — Producers of most major crops in the U.S. — including the big-three of soybeans, wheat and corn — will be eligible for direct payments totaling $14.5 billion under the Market Facilitation Program (MFP) for 2019.

Payment will be based on a single county rate multiplied by a farm’s total plantings to those crops in aggregate in 2019. Those per-acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions, according to the USDA. Payment rates were not released.

Dairy producers will receive a per-hundredweight payment on production history and hog producers will receive a payment based on hog and pig inventory for a later-specified time frame.

Tree nut producers, fresh sweet cherry producers, cranberry producers, and fresh grape producers will receive a payment based on 2019 acres of production.

A US$1.4 billion Food Purchase and Distribution Program (FPDP) will operate through the Agricultural Marketing Service (AMS) to purchase surplus commodities affected by trade retaliation such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk for distribution by the Food and Nutrition Service (FNS) to food banks, schools, and other outlets serving low-income individuals.

Another $100 million will be issued through the Agricultural Trade Promotion Program (ATP) administered by the Foreign Agriculture Service (FAS) to assist in developing new export markets on behalf of producers.

Further details regarding eligibility and payment rates are to be released at a later date.

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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.

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The package would include payments of about $2 per bushel for soybeans and four cents per bushel for corn, according to Bloomberg. An official announcement is expected Thursday.

“The general thought was producers would switch over to soybeans as much as they could, in order to take advantage of the benefit of particular farm aid,” explained Terry Reilly, a grains analyst with Futures International.

Rich Feltes of RJ O’Brien believed the timing of the USDA announcement will also shift around seeded acres.

“It would have been better if they had come out with this in July, after all the crops were in the ground,” he said.

“Even though they’re going to try not to distort final planting decision, I think it’s going to have that impact.”

With details of the package unclear, traders are anticipating producers will stick with previously stated planting intentions “to the best of their ability,” said Reilly.

However, as flood conditions continue to hit the Midwest, Reilly predicted unplanted corn area may get switched to soybeans.

“We’ll lose 3.1 million acres from March intentions for corn, probably adding 1.2 million acres of soybeans,” said Reilly.

The amount of lost corn acreage may rise further as weather forecasts predict more rain.

“In other words, we’ll see a total acreage decline from March intentions,” Reilly confirmed.

Feltes agreed traders are scrambling to cut their losses as corn acres remain underwater.

“It’s fairly simple, we’re losing new-crop supply and managed funds are still short over 160,000 contracts of corn.”

Since both acreage and yield potential for corn is significantly down, corn is the “floor leader” with July contracts testing in the $4.05-$4.10 range (all figures US$).

Support from corn prices has lifted soybeans higher, around the $8.50-$8.55 level.

— Marlo Glass writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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