County MAL loan rates are then adjusted up or down from national rates, based on local commodity price differentials from national price levels.
2021 loan rates in Minnesota counties range from $ 2.01 to $ 2.13 a bushel for corn and $ 5.81 to $ 6.15 a bushel for soybeans. Iowa loan rates range from $ 2.07 to $ 2.30 a bushel for corn and $ 6.07 to $ 6.33 for soybeans. South Dakota loan rates range from $ 2.03 to $ 2.20 a bushel for corn and $ 5.66 to $ 6.09 a bushel for soybeans. North Dakota loan rates range from $ 1.99 to $ 2.19 a bushel for corn and $ 5.66 to $ 5.96 a bushel for soybeans. Nebraska loan rates range from $ 2.10 to $ 2.27 a bushel for corn and $ 5.81 to $ 6.18 a bushel for soybeans.
The commodity loan rates for all US counties are available at: https://www.fsa.usda.gov/programs-and-services/price-support/commodity-loan-rates/index
The interest rate on the CCC loan is adjusted monthly and set at 1% above the CCC borrowing rate from the US Treasury. The interest rate for CCC loans is fixed for the entire duration of the Marketing Assistance Loan (MAL) of 9 months, except for a possible adjustment of the CCC interest rate on January 1.
The current interest rate on CCC commodity loans is only 1.125% interest, which has been stable for several months. Producers only pay interest for the duration of the MAL.
(Example: MAL corn loan of $ 100,000 at 1.125% interest for 90 days …… ($ 100,000 x 0.0125) / 365 x 90 = interest payment of $ 308.22).
Farmers have the option of placing grain on CCC loan at a local FSA office any time after the grain is harvested. Producers also have the option of treating the loan of CCC products either as “income†or as a “loan†when the loan proceeds are received. This may have tax implications, depending on how and when the loan proceeds are received.
It is best to consult a tax advisor before determining when and the preferred method to receive the loan proceeds.
If commodity prices fall to levels below county loan rates, eligible producers could potentially release grain on a CCC MAL loan at a rate lower than the county loan rate.
The FSA issues a “County Listed Price†(PCP) for products eligible for MAL loans, which is updated and posted daily at local FSA offices, or available on the county FSA’s websites. If the PCP is lower than the county loan rate, the producer could realize a “commercial loan gain” (MLG), if the grain is released at that lower PCP.
Example: a farmer places corn under a MAL at $ 2.10 per bushel, a few months later the PCP is $ 1.90 per bushel, which translates into a potential gain on the marketing loan of 0 , $ 20 per bushel on the day the corn loan is released.
If the PCP falls below the county MAL loan rate, growers also have the option of collecting a Loan Compensation Payment (LDP) on a product, instead of placing the grain under an MAL loan. The calculation of LDP is similar to the calculation of earnings on marketing loans. Grain that is already the subject of a MAL loan is not eligible for an LDP, and an LDP can only be used once on the same bushels of grain.
There has been no significant PDL eligibility for corn and soybeans since the early 2000s.
Producers must be eligible for USDA agricultural program benefits and must have submitted an acreage report to the FSA office for 2021 to be eligible for CCC’s marketing assistance loans on this year’s crop production. .
Producers must maintain a “beneficial interest” in the grain while it is the subject of a MAL loan. Beneficial interest means that the producer retains control and title to the commodity while it is on loan from CCC. Producers should contact the FSA office to release any grain that is subject to an AML with CCC before it is delivered to market (“call before haulâ€).
Here are some reasons why farmers may consider using CCC marketing assistance loans as part of their grain marketing strategies:
MALs offer short term loans at relatively low and stable interest rates
MAL loan funds can be used to pay for post-harvest expenses and land rental payments for the current year or for prepaid crop inputs (seeds, fertilizer, etc.) for the following season.
MAL loan funds can also provide the funds needed to make year-end or January principal and interest payments on term loans and home loans.
A MAL allows a producer to receive partial compensation for corn and soybeans during or after the fall harvest season, when commodity prices are traditionally below average
A MAL gives a producer the flexibility to market grain in the months to come after the grain has been placed under a CCC loan, including forward pricing of the grain for future delivery (the CCC loan must be satisfied at the office FSA prior to grain delivery.)
CCC MAL loans can also be used by cattle ranchers who plan to feed corn or other grains, which is followed by the release of the loaned grain as it is fed.
If commodity prices drop below the county’s CCC loan rates, the grain subject to a MAL loan may be released at a lower price or producers may receive a Loan Compensation Payment (LDP).
For more information on Marketing Assistance Loans (MALs) through the CCC and LDP, farmers should contact their local FSA office or visit the following website: https: //www.fsa. usda.gov/programs-and-services/price -support / commodity-loans / index.
For more information, contact Kent Thiesse, Farm Management Analyst and Senior Vice President, MinnStar Bank, Lake Crystal, Minnesota, at 507-381-7960 or [email protected] , or visit www.minnstarbank.com .
