Today's WASDE Report Might Lead to Extra $3.6 Billion of Ag Payments
USDA cut the MYA corn price by 30 cents today. This will likely result in at least another $3 billion of payments next October.
USDA made some major changes to the estimated corn crop carryover today in their WASDE report.
They increased the amount of planted and harvested acres by about 2 million acres and estimated the final corn yield at 188.8 bushels per acre which would be a record. Now it is only early August and a lot of things can happen between now and harvest to reduce the yield but we will have a large crop.
As a result of these changes, they dropped the estimated MYA price for corn by 30 cents to $3.90. Since USDA will pay the higher of PLC or ARC for the 2025 crop, we thought we would estimate the amount of extra payments to be paid next October solely due to a drop in MYA prices of 30 cents.
There are about 100.74 million corn base acres. The national PLC yield for corn is about 141 bushels per acre. If we multiple base acres times yield times 30 cents we arrive at an increase in total PLC payments of about $4.3 billion. However, farmers are only paid on 85% of base acres so the total net increase is around $3.6 billion. If we factor in some extra payments related to ARC paying more than PLC in many situations, then we could easily approach an extra $4 billion in payments to farmers for corn next year.
Another way of looking at this is for every 10 cent drop in MYA corn price, farmers on average will receive an extra $1.2 billion in payments. Some farmers will max out on the payment limits so the final number might be less.
In regards to receiving the higher arc or plc payment how does that apply to SCO with the grower being required to elect PLC if you make the SCO election on crop insurance .