Final Harvest Prices for Crop Insurance Determined
Contributed by Steve Johnson, Extension Farm Management Field Specialist, firstname.lastname@example.org.
Harvest prices determined in the month of October appear to be $4.39 per bushel for corn and $12.87 per bushel for soybeans. These are the average futures prices for December CME corn and November CME soybean contracts in the month of October. These final numbers are still to be verified by the USDA Risk Management Agency (RMA).
This and the farm’s actual 2013 yields are the final pieces in determining the potential crop insurance indemnity claim for both corn and soybeans. Those final harvest prices suggest that crop insurance revenue policies on corn will trigger indemnity payments this year. This is especially true if the insured purchased a revenue policy at higher levels of coverage (80 or 85 percent). Farmers experiencing yields below their Actual Production History (APH) should keep good production records and report these to their crop insurance agent immediately upon completion of harvest.
It would take a significant drop in yields to trigger such an indemnity payment. For corn, the harvest price dropped by more than 22 percent from the projected price of $5.65 per bushel determined in February. Since revenue protection coverage guarantees yield times price, those higher levels of coverage will trigger if the actual harvest yields falls below the insured’s APH.
For soybeans, the harvest price is exactly the same at the projected price, $12.87 per bushel. That’s the average settlement price of the November CME soybean futures contract during February. To trigger an indemnity payment in soybeans, the actual yield will need to fall at least 15 percent below the APH for an 85 percent level of coverage. So a substantial yield loss on soybeans will have to occur before crop insurance indemnity payments would be triggered.
Since corn and soybean yields will vary across farms and many insureds use enterprise unit coverage, crop insurance indemnity payments will also vary. A farmer should contact their crop insurance agent with their estimated yields to determine the potential for an indemnity claim. Keep good production records and report the final production immediately upon completion of harvest. This will help expedite an indemnity claim for 2013 and help determine the APH for 2014 crop insurance decisions.
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