Friday, April 10, 2009

Commodities | Commodity Loan Repayment Rates

Payment rates for a number of commodities will be the recipients of a new USDA repayment program, in an attempt to offer a more stable system for making a decision on "non-recourse marketing assistance loan repayment rates and loan deficiency payment rates," according to a press release from the USDA.

Included in the commodities that could benefit from the latest system would be feed grains, wheat, mohair, pulse crops, wool and oilseeds. Commodities not being affected by the change are cotton, peanuts and rice.

Supposedly the new system will keep fluctuations in the loan repayment rate from swinging too widely, and will 'moderate' those actions.

Taking into account the 2008 Farm Bill, the loan repayment rate could in reality be anything, as it's determined by either the average market prices over the prior 30 days, or any type of alternative method a Secretary of Agriculture decides.

In mid April, the USDAs Commodity Credit Corporation will list the repayment rates from the last month for wheat, corn, grain sorghum, soybeans, barley, oats, canola, flaxseed and sunflower seed.

During the same period, evidently the Commodity Credit Corporation will also list a repayment rate in relationship to the last five days.

The existing method of determining repayments is based on the market rates of the day before. Now it will be the lower of the two methods mentioned.

There are other elements of the 2008 Farm Bill which eliminated the Secretary of Agriculture from establishing loan and repayment rates for other cops as well. Some crops will have loan repayment rates based on U.S. grade #1.

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