Corn Demand Recovery Forecast May Be Overly Optimistic

[rswfarms]

LostinIowa- nice name!!!! LOL

But I believe that the ACRE Guarantee Price in 2013 is around $5.50. That makes a huge difference. But yes, we need to nail down the ACRE Guarantee Price down to the penny. So we need to find out that exact number, which is the overall average corn price for the 2012 and 2011 crop year. But I am sure this number is over $4.15. Table 2 is below: 

Table   2: ACRE Program Guarantee   (Crop year and previous years must be data filled)		Corn   Example	Your   Example
1.	Benchmark State Yield (Olympic Average from 5 most recent crop   years)	160
2.	ACRE Guarantee Price (Average National Average Market Price from   2 most recent crop years)	$4.15
3.	Calculated State ACRE Guarantee for the crop year (90 percent x   Item 1 x Item 2)	$597.60
Note: For subsequent years, the State ACRE Guarantee cannot   change by more than 10 percent from the previous year's guarantee.

[rswfarms]

Say, if anyone knows the overall corn price average for the 2011 and 2012 crop years for us to get the ACRE Guarantee Price in 2013 let us know. I haven't found out what it is on the USDA Website. It is like they are trying to hide it from us farmers so they don't have to pay us if we do qualify for an ACRE Goverment Subsidy. But I do believe it is much higher than the example of $4.15 in Table 2 that I posted above. Here is Table 2 again:

Table   2: ACRE Program Guarantee   (Crop year and previous years must be data filled)		Corn   Example	Your   Example
1.	Benchmark State Yield (Olympic Average from 5 most recent crop   years)	160
2.	ACRE Guarantee Price (Average National Average Market Price from   2 most recent crop years)	$4.15
3.	Calculated State ACRE Guarantee for the crop year (90 percent x   Item 1 x Item 2)	$597.60
Note: For subsequent years, the State ACRE Guarantee cannot   change by more than 10 percent from the previous year's guarantee.

[NDf]

rswfarms At a marketing meeting last week the worksheet handed out had the national ave price for 2013 @ around $4.48. I assume he was right if so a guy will need low prices and low yields ( including your state) to collect, but might be worth it for a just in case situation since a guy isn't giving up much.

[425Cat]

Do you know what the prices are for wheat and beans??

[rswfarms]

NDF- thanks, $4.48, I thought someone told me around $5.50, but I could easily be wrong. I am going to call my local FSA office tomorrow and see if they can get us the exact ACRE price for corn, soybeans, and wheat (I don't grow wheat, but will ask for 425CAT). We need to get this price hammered down to the penny so we know and can see how this can work into our marketing plan. ACRE is kinda like a "Super Put Option", meaning it pays on a 1 to 1 price ratio when the corn price drops to the ACRE Guarantee Price. I signed up in 2008 for ACRE but the corn prices have been very good the last 2 years so haven't been keeping track of the overall average corn price by crop year. But if corn drops to $4 or even in the $3+ range because they say we could have a 2013/2014 Two Billion bushel corn carry-over we should be prepared with a accurate ACRE Payment, not only for our marketing of corn and beans, but also our cash flow. Anyway, I will call the FSA office and see if they can get us some answers to our ACRE questions. Will update you after I call my FSA office. Now if they don't know the answers to our ACRE questions, it could be tough to get the ACRE Guarantee Price. Thanks for the input guys!!!! We will get the answers one way or another so we know what the hell is going on with ACRE. Also, my cost to be in ACRE is only 2 cents per corn bushel, so it is almost free and one of the reasons I signed up for it. 2 cents per bushel is peanuts. And if it kicks in for just a 10 cent per bushel payment this year we will have gotten all our money back that it cost us to be in ACRE.

[NDf]

RSW I thought it was low too , but thats what I was told. If your $5.50 figure is right I think it's a no brainer to use it as revenue protection tool for areas out side the cornbelt where production can vary greatly from year to year and really doesn't put price pressure on the national price if production falters.

[rswfarms]

Yes NDF, if my $5.50+ figure is correct for the ACRE Target Price, it is a no-brainer to sign up for it I believe. And that includes all the I-states, along with all the other cornbelt states. It would be a 1 to 1 "Super Put Option" that you have paid only 2 cents a bushel for. You could never buy this type of downside protection on Chicago for only 2 cents per bushel, it would be a helluva alot more money than just 2 cents. I can see it now if the Target ACRE corn price is $5.50+ for 2013, there will be a mass rush for everyone to sign up. I have been in ACRE since the last Farm Bill was passed, so no need to worry myself since it is automatically renewed every year for me. Another thing I like about ACRE is that it is like a jet airplane on automatic pilot, no action is required from me, just sign up for it and no more action is required. Just watch the crop year average corn price.

[425Cat]

Let us know as soon as you find out. I have one farm in Acre and trying to decide if I should pull it out and go DCP.My appt is this week

[rswfarms]

CAT425- you better check this out, but if you have a farm in the ACRE Program now, I believe it is against the rules to try and pull it out of ACRE and re-enroll it in the Direct Payment Program. I am 99% sure that I am correct on this, once a farm is signed up for ACRE,under the 2008 Farm Bill, it stays in ACRE until the new Farm Bill becomes effective. In this case, since the farm bill hasn't been passed yet, I believe the 2008 rules stay in affect for 2013, meaning you can't pull a farm out of ACRE and try to re-enroll it under the Direct Payment option.

[rswfarms]

425CAT- Below is the rule on trying and pull a farm out of ACRE and re-enroll in the DP Program. You can't do that it appears since the 2012 rules apply to 2013. Below is out of the rule book on ACRE. It appears once a farm is in ACRE, it stays in ACRE and can not be switched to DP.

Can farmers move in and out of ACRE? No. Once ACRE is chosen, the choice applies to all subsequent years covered by this legislation (2009–2012).