BILLINGS, MT (August 30, 2016) – It’s been over 10 years since wheat prices have fallen low enough to trigger the Loan Deficiency Payment (LDP) program but Monday the struggling wheat market did exactly that. And for Montana producers in Yellowstone County, it means wheat prices finally went below $2.86 a bushel.
Michelle Erickson-Jones farms near Broadview, MT with her husband Travis. She’s also an officer of the Montana Grain Growers Association serving as the organization’s Secretary. She says a huge world supply of wheat is to blame for the today’s low wheat market.
“Unfortunately there is going to continue to be an over-supply, Jones said. The U.S had a bumper crop, Russian had a bumper crop. We are looking at the highest carry out, if I read the graph right, since 1990. We are going to struggle, at least in the near term.”
For producers who have yet to sell their wheat, the LDP program helps cover the gap between the price of wheat and the loan value of the commodity. “For the first time in recent memory, at least a decade, for hard red winter wheat, there is an LDP payment in every county. It varies from 13 cents to 15 depending on what county you are in,” said Erickson-Jones
She added, “It’s an important program to make sure that you look at and check out the rates and decide if you are going to lock in at a certain rate.”
According to Yellowstone and Carbon County FSA Executive Director Julie Winters, LDP payments on Monday were 8 cents a bushel, and today on Tuesday were up to 15 cents. “For producers that still own their winter wheat and didn’t sell, this can be a good deal. If a producer came in today with 5000 bushels of wheat, we could write them a check for $750.”
The producer doesn’t have to sell the wheat right away once they lock in the LDP payment rate, but they are locked into the rate they accepted even if the market price goes down even further.
The LDP is updated daily based on current market prices. For a producer to maximize the LDP, they need to pick the bottom of the market and some Montana producers report using a marketing advisors to decide when to lock in the LDP rate.
The LDP program has also been triggered in Wyoming and the Dakotas with rates ranging from 13 to 24 cents depending on the county. Call your local FSA office for the most current rates or check online here: http://bit.ly/2ccyU7c
CLICK HERE for additional information about the FSA Loan Deficiency Payment program
© Northern Ag Network 2016
Pixabay photo: CC0 Public Domain
