Who Was Closer – CBO or Paul?
The USDA yesterday released data on the sign up for ARC and PLC by all of the covered crops. As expected from our posts before on the subject, most of the corn and soybean acres signed up for ARC-CO versus PLC. Summarizing some of the major crops as follows:
Of the crops on the table, grain sorghum, peanuts and wheat signed up more acres for PLC than ARC. Corn and soybeans signed up more than 90% of their acres to ARC. Cotton generic acres totaled about 17.6 million acres which can be used for any of the crops shown above and likely would be used for soybeans, sorghum, corn and peanuts.
The CBO originally estimated total corn base acres at 90.9 million acres which missed the final number by about 5.8 million acres. Of those acres, the CBO estimated about 37 million acres would sign up for ARC and slightly more than 90 million acres actually signed up for ARC. I estimated that at least 75% of the corn acres would sign up for ARC, so I would estimate that I was much closer on my estimate.
The CBO originally estimated soybean base acres at 76.8 million acres and actual was 54.6 million acres which was 22.2 million acres greater than actual sign up. As we have posted several times, base acre reallocation would most likely allocate more acres to corn and that is what we see happened in the case of beans.
CBO estimated wheat base acres at 57.4 million acres and actual base acres was 63.7 million acres. Again, base acre reallocation took acres from soybeans and gave it to wheat (or the CBO had the wrong number).
To get an idea of the total corn ARC payouts for the 2014 crop year, I took the total ARC corn acres for Iowa, Minnesota, Nebraska, and South Dakota of about 40 million acres and multiplied by an average of $50 per acre to arrive at $ 2 billion of corn ARC payments. CBO revised estimate in January had $1.045 billion of corn ARC payments. They estimated $1.6 of corn PLC payments. We know that they will be at least $1.5 billion too high on PLC and probably $1.5 billion too low on corn ARC. Therefore, their total corn payments may not be too far off.
Once the final 2014 yields come out, we will have a better feel on final payments. We hear those will be released later this summer.
Also, remember that you must enroll your acres between June 17 (tomorrow) and September 30. Although you have elected between ARC and PLC, you must now enroll. This involves simply signing a form at the local FSA office. There is no reason to delay in doing the enrollment.