These commodities may either be stored on farm or in warehouses. Before or upon loan maturity producers may repay the loan principal plus accrued interest and the commodity under loan will be released. Or, they may allow the loan to mature and forfeit the commodity to the USDA Commodity Credit Corporation to offset loan principal and accrued interest. Or, they could repay the loan at the posted-county price for the commodity that prevailed on the day of settlement. Under this last alternative their commodity held as collateral would be released plus they would receive a marketing loan gain on a per unit basis equal to the difference between the county loan rate for the commodity under loan and the pertinent posted-county price on the day of settlement.
Producers now have one more settlement alternative.
They may now lock in a repayment rate on a marketing assistance loan for 60 days. On a particular date they may observe a favorable posted-county price for a commodity. The posted-county price may be low compared to the loan rate for a commodity. They might not be able to repay their loan on that date for a variety of reasons including insufficient cash. But they want to take advantage of the favorable repayment rate.