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Additional CFAP 1 Payments and Futures Market Update

By Josh Maples
On Wednesday, March 24th, USDA announced updates to the Coronavirus Food Assistance Program (or CFAP) and these updates directly affect cattle producers. For background, there were two rounds of CFAP during 2020 that provided direct payments agricultural producers including cattle producers (you can find previous newsletters on CFAP 1 and CFAP 2 here and here).
With the latest updates, previous applicants will receive additional payments for inventory submitted on their CFAP 1 applications. The additional payment rates are shown in the table above. USDA is implementing an increase in CFAP 1 payment rates based on the number of cattle in inventory between April 16, 2020 to May 14, 2020. Cattle producers with approved CFAP 1 applications will automatically receive these payments.
Additionally, USDA will reopen acceptance of new and modified CFAP 2 applications on April 5, 2021. The application period for CFAP 2 previously ended on December 11, 2020. This reopening likely won’t affect the many producers who already submitted and received CFAP 2 payments. However, if you did not submit a CFAP 2 application, this will be another chance to do so. The program is advantageous to cattle producers. The payment rate is $55 per head for a producer’s owned inventory of eligible beef cattle (excluding breeding stock) on a date selected by the producer from April 16, 2020, through August 31, 2020. More information is available from USDA by clicking here.
Futures Market Update
Trading of CME feeder cattle futures contracts pushed prices higher last week after declines two weeks ago. The May 2021 contract started last week around $145. Increases each day last week and in trading today pushed the contract price above $152 which is the highest level seen for that particular contract month and year.
Similar strength occurred in the fall contracts with many topping $160 per cwt today. For context, this is the first time any feeder cattle futures contract has closed above $160 since April 2019 when the fall contracts traded above $160 for a few weeks. Prior to that, you’d have to go back to 2017 to find a daily closing price above $160.
There remains optimism for cattle markets this year. As Kenny wrote a few weeks ago, the strong fall feeder contract prices suggest a relatively attractive price forecast for heavy feeders this fall and more aggressive bidding on calves to be placed in grazing programs this spring. High feed prices remain a point of concern and cattle markets will be paying attention to corn crop progress this year. The annual Prospective Plantings report will be released this week on March 31.
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