The Trump administration is deploying about $11 billion to crop producers by the end of February through what they’re calling a bridge payment. In the past, when there had been an ad-hoc payment, producers used those payments to not market a crop because they had something on hand in their cash supplies. That may not be the best option. Joe Janzen is an agricultural economist from the University of Illinois. He’s been talking with farmers about payments that come in from the United States government. In the past, what do we know, particularly from the Trump administration’s MFP, or Market Facilitation Program, about the payments that took place, which seem very similar to what this bridge payment might be.
“Going back in history is a helpful guide, I think, in this case. What would farmers do with this money? Well, I think we know that they probably won’t adjust production levels, right? It doesn’t really change our incentive to plant a crop or not. But I think it can have an influence on marketing decisions, particularly the decision to hold grain for longer into the end of the marketing year. That’s what we saw during the MFP era: the trade aid payments that were made in 2018 and ’19. We saw the farmer being a much bigger holder of the crop in 2018 and ’19, particularly for soybeans. Some of that was, yes, market conditions, but some of it, and we’ve done some research to show that some portion of those additional inventories that were held after harvest those years really were on-farm inventories held directly because of the money that was paid out by the administration for those payments.”
He said the logical question is, will we see that again?
“I think anecdotal evidence suggests that, yes, indeed, that may be the case. The farmer’s already a pretty large holder from what we’ve heard ahead anecdotally. We’ll get some confirmatory evidence of that when USDA releases its Grain Stocks Report in January. And the big concern is: what does that do? It kind of narrows the marketing window for the farmer. And the potential is that you’re stuck holding a crop in, let’s say, June and July, with a very short time window in which to get that crop sold before we have a 2026 harvest.”
He said the USDA report in January is comprised of the grain stocks figures, the World Agricultural Supply and Demand Estimates, and the final crop production numbers, along with a winter wheat plantings and acreage figure. The fear is that those combined will set a tone for the marketplace, probably for the first quarter of the year. And if they don’t change anything, producers will have missed opportunities to market a crop because they decided to hold at this point. Janzen said the changes could come, but the tone may very well not change very much.
“I don’t have a crystal ball into what that report will contain. I just suspect that we will see higher-than-normal levels of on-farm inventories of corn and soybeans after this 2025 harvest, which was maybe not as big as we once thought it could be, but was still a big crop by any measure. And so, if we do, in fact, see that, and the farmer is a big holder of corn and beans after harvest, they have a bigger marketing challenge than they would in any other year.”
And that will present a big challenge.
“In terms of how do we get that crop priced and not get pushed into a narrow marketing window where prices may not be what we would have hoped they would get to, where we would get sort of in terms of that typical seasonal improvement in price may not be there, given the big crop and the big farmer inventories and then whatever news we get about the size of the crop elsewhere in the world, principally South America.”