Stimulus Bill Adds Billions in Support for Ag Producers
- Adds $14 billion to the Agriculture Department's Commodity Credit Corp spending authority. Bringing limit to $44 billion.
- Has been recently used to compensate farmers and assist the ag sector due to the U.S.-China trade wars.
- Authorize another $9.5 billion for U.S. producers hurt by the fast-spreading pandemic.
- The additional funds target assisting livestock producers, such as cattle ranchers, and hog and dairy farmers.
- Also eligible are fruit, vegetable and other so-called "specialty crop" producers, and those who sell through farmers markets and other local food systems.
- FBN’s Take On What It Means For The Farmer: The additional spending authority to CCC, which was replenished already this fiscal year with the current federal budget, could open the door for the Agriculture Department to make a third round of Market Facilitation Program payments. Further details may not be immediately announced so as not to affect planting intentions. We believe the aid is needed in the ag sector, but it may incentivize increased planted acres which could weigh on balance sheets.
- Reports that exporters are suddenly having difficulty in getting certificates from the Russian Phytosanitary Service.
- In the past this has been a way of instituting export restrictions without making an official export suspension edict.
- Many destinations are worried about food security as the coronavirus spreads.
- Kazakhstan was up front with their wheat and flour export suspension until at least mid-April.
- Iraq’s trade ministry has let its government know it needs funds to purchase 1.0 million tonnes of wheat and 250 thousand tonnes of rice to help ensure sufficient stockpiles.
- Not sure why SRW was so strong in the nearby, other than short covering by speculative funds.
- FBN’s Take On What It Means For The Farmer: We believe this an opportunity to sell some wheat at more profitable levels. Concerns about basic food shortages in the Mideast/North Africa may remain a feature in the wheat market. The relative strength in Chicago is hard to explain and the break in the SRW CIF barge market may be an indication.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)