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Interest rates on commodity loans disbursed in September will carry an interest rate of 1.375%, up from 1.250% in August, according to USDA’s Commodity Credit Corporation (CCC). The CCC borrowing rate-based charge for September is 0.375%, up from 0.250% in August. Interest rates for commodity and marketing assistance loans (MALs) are required to be 100 basis points - or 1% - higher than the CCC borrowing rate-based charge per a provision in the 1996 Farm Bill. Interest rates for Farm Storage Facility Loans approved for September are as follows:2.000% with seven-year loan terms, down from 2.125% in August; 2.250% with 10-year loan terms, down from 2.375% in August and; 2.250% with 12-year loan terms, down from 2.500% in August. The interest rate for 15-year Sugar Storage Facility Loans for September is 2.375%, down from 2.625% in August.
Comments: This is the second time this year CCC has increased the interest rate on commodity loans. The first increase was from 1.125% in January to 1.250% in February. The 1.375% rate in effect for September is the highest interest rate since Jan. 2010 when it was 1.375%. For 2014 crops, farmers obtained MALs on 574 million bu. of corn, 80.1 million bu. of soybeans and 42.8 million bushels of wheat. Those marked the highest totals since the 2011 crop year when MALs were taken out on 574.1 million bu. of corn and 98.5 million bu. of soybeans. Producers obtained MALs on 36 million bu. of 2011-crop wheat. Already, producers have taken out loans on 3 million bu. of 2015-crop wheat. “Loan economics” is a phrase market commentators have not used for several years.But if the crop markets, especially for corn, soybeans and wheat, are as bearish as some observers think in the year or years ahead, more of those crops will go under loan as farmers seek financing at a very low interest rate, holding the grain in hopes of higher values ahead. |
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