Full farmdoc daily article at Reductions in the sales value of unpriced grain likely will be the first place where grain farms feel the impacts of COVID-19 control measures. Overall, old-crop sales likely will be reduced from expectations prior to COVID-19 concerns. Some farms will be more impacted by these concerns than other farms. Before discussing old-crop cash flows, a general discussion of all cash flows impacted by COVID-19 is given.
Cash Flows impacted by COVID-19
Potential cash flows of grain farm receipts are depicted on the timeline shown in Figure 1. All of these cash flows may be affected by COVID-19 concerns and the impact of control measures. These cash flows include:
Old-2019 crop sales. Old crop sales are sales of crops produced in 2019 that are sold in 2020.
New-2020 crop sales. New crop sales are sales of crops produced in 2020. Regardless of when sales are contracted, cash flows for the sales usually begin in September and continue into 2021 as additional sales are made.
2019 Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) payments. These will be received in October. As covered in last week’s farmdoc daily, these ARC/PLC payments could increase from previous expectations due to a decline in 2019 market year average (MYA) prices.
Crop insurance payments for the 2020 crop. For COMBO products, crop insurance payments, if triggered, would occur in November and December. Area products would make 2020 payments in June 2021.
Sales of future crops could also be impacted by COVID-19. The extent of COVID-19 impact is unknown but could be prolonged and extend into future crop years.
2020 ARC/PLC payments, if triggered, will be received in October 2021. Similar to 2019 crop year payments, reductions in 2020 market year average price forecasts increase expectations for 2020 ARC/PLC payments.
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