Tuesday, March 2, 2021  
- DTN Headline News
Insurance Guarantees Highest in Years
By Katie Micik Dehlinger
Friday, February 26, 2021 5:36PM CST

MT. JULIET, Tenn. (DTN) -- Spring crop insurance guarantees for corn and soybeans will be $4.58 and $11.87 per bushel, respectively, increases of $0.70 and $2.70 from last year.

For corn, it's the highest spring guarantee since 2014; it's the highest since 2013 for soybeans.

The guarantees are an integral part of revenue protection crop insurance policies. While farmers have several types of federally subsidized crop insurance to choose from, revenue protection is the most popular. The spring guaranteed prices are calculated by averaging the daily close of the December corn and November soybean contracts throughout February. They're then combined with the farm's historical yield average to calculate a level of insurable revenue. Farmers can elect to cover up to 85%, with most farmers choosing to purchase 75%, 80% or 85%, depending on what the premiums are in their area.

Higher guarantees, like this year, mean farmers will have better protection if prices or yields dropped sharply. If a farmer purchases 85% coverage on corn, that equates to a price of $3.89 per bushel, at or above many farmers' break-even levels.

"I think, No. 1, is that it helps farmers relax a little bit knowing that they've got pretty good downside protection there and can still come out OK if, for some reason, prices did fall apart and go lower," DTN Lead Analyst Todd Hultman said.

For most Midwestern growers, the deadline to purchase crop insurance is March 15. University of Illinois ag economist Gary Schnitkey said farmers should expect premiums to increase. He also encourages farmers to consider a new supplemental crop insurance product, called the Enhanced Coverage Option. While it's based on county yields instead of farm history, it has a high probability of paying out. For more details on that program, please read "New Crop Insurance Option Provides Higher Levels of Coverage" here: https://www.dtnpf.com/….

Higher crop insurance guarantees reflect the upward trend in prices that began last August, as Chinese demand for corn and soybean picked up speed.

"I think there's a lot of bullishness in the country right now," Hultman said. "Even after USDA's new-crop estimates at the Ag Forum, there's not a big expectation prices are going to fall apart this year. So I think that those kinds of worries are -- I won't say totally off the table -- but I think, in the minds of many, certainly are much less this year, and the crop insurance just helps add to that peace of mind."

USDA released its first look at new-crop supply and demand estimates last week. It estimates farmers will plant 92 million acres of corn and 90 million acres of soybeans. But, despite high production forecasts, early ending stocks estimates for both crops are tighter, at 1.6 billion bushels for corn and 145 million bushels for soybeans. For more on USDA's early outlook, please read "Outlook Forecasts Larger Corn, Soybean Crops for 2021" here: https://www.dtnpf.com/….

Hultman said the higher guarantees give farmers even more incentive -- on top of spot prices of $5 per bushel for corn and $13 for soybeans -- to plant as many acres as they can.

"I've heard some say that, if the weather is dry early and things look favorable the way it's looking right now, they might just keep planting their corn once they get going," Hultman said. "But, on the other hand, some are saying that fertilizer for corn might be getting a little more expensive or difficult to come by and that with possibly a dry weather outlook might tilt some more people to soybeans. I'm really hoping we come out close to a 50-50 split this year, but we'll be crossing our fingers to see how that works out."

Retail fertilizer prices have jumped significantly over the past several months, and especially in the last few weeks, according to prices gathered by DTN. While DAP and MAP prices have generally led the charge, prices for nitrogen products are also surging, with urea prices increasing 18% from the month before. UAN32 gained 15% while UAN28 jumped 14%. Anhydrous ammonia prices, currently at $530 per ton, are also 10% higher than the month before. For more on recent price moves, please read "Fertilizer Price Rally Continues; DAP, Urea, UAN Prices Surge" here: https://www.dtnpf.com/….

Hultman said the strength of corn and soybean prices could draw more acres away from spring wheat, even though spring wheat price guarantees at $6.53 per bushel are almost $1 per acre higher than last year. "The nice thing is that, for the most part, wheat's kind of going along with corn and beans."

USDA will begin surveying farmers on their planting intentions next week and will release their finding in the March 31 Prospective Plantings report.

Katie Dehlinger can be reached at katie.dehlinger@dtn.com

You can follow her on Twitter @KatieD_DTN

blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Monday, March 1, 2021 10:39AM CST
Friday, February 26, 2021 11:00AM CST
Monday, February 22, 2021 8:57AM CST
Technically Speaking
Editorial Staff
Monday, March 1, 2021 8:50AM CST
Monday, February 22, 2021 8:21AM CST
Tuesday, February 16, 2021 9:38AM CST
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Friday, February 26, 2021 7:10AM CST
Wednesday, February 24, 2021 9:07AM CST
Tuesday, February 23, 2021 10:18AM CST
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Tuesday, March 2, 2021 1:45PM CST
Monday, March 1, 2021 4:06PM CST
Thursday, February 25, 2021 7:01AM CST
Minding Ag's Business
Katie Behlinger
Farm Business Editor
Tuesday, March 2, 2021 1:00PM CST
Wednesday, February 24, 2021 3:51PM CST
Thursday, February 11, 2021 4:33PM CST
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Tuesday, March 2, 2021 12:02PM CST
Thursday, February 25, 2021 10:56AM CST
Tuesday, February 23, 2021 12:59PM CST
DTN Ethanol Blog
Editorial Staff
Tuesday, March 2, 2021 3:35PM CST
Friday, February 26, 2021 12:21PM CST
Friday, February 19, 2021 8:22AM CST
DTN Production Blog
Pam Smith
Crops Technology Editor
Tuesday, February 23, 2021 10:06AM CST
Friday, February 19, 2021 12:04PM CST
Monday, February 8, 2021 2:16PM CST
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Monday, March 1, 2021 5:05PM CST
Monday, March 1, 2021 5:05PM CST
Monday, February 22, 2021 3:23PM CST
South America Calling
Editorial Staff
Thursday, February 25, 2021 12:58PM CST
Thursday, February 18, 2021 12:20PM CST
Thursday, February 11, 2021 4:51PM CST
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Monday, March 1, 2021 9:39AM CST
Friday, February 19, 2021 5:10AM CST
Wednesday, February 10, 2021 12:05PM CST
Machinery Chatter
Dan Miller
Progressive Farmer Senior Editor
Friday, February 26, 2021 11:20AM CST
Thursday, February 18, 2021 3:46PM CST
Friday, February 12, 2021 2:03PM CST
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Tuesday, March 2, 2021 3:46PM CST
Monday, March 1, 2021 4:18PM CST
Monday, March 1, 2021 4:18PM CST
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Thursday, December 31, 2020 8:57AM CST
Wednesday, December 2, 2020 12:37PM CST
Friday, September 4, 2020 3:48PM CST
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN