The January report is usually a big one, as it contains the “final” estimates for the 2023 crops. Beyond that, this report is also the one where they adjust the 2018-2022 data based on the Census of Agriculture. There was a lot going on, with the punchline being, USDA found even bigger crops and stocks, pressuring the markets down.
For 2023 corn, planted and harvested acreage was reduced, but the national average yield was increased by 2.4 bushels per acre, leading to a 108 million bushel increase in production. Feed and residual use was boosted by 25 million bushels, and there was a 50 million bushel increase in ethanol. Putting everything together, 2023-24 ending stocks increased by 31 million bushels, approaching 2.2 billion bushels. USDA lowered its 2023-24 season average price by five cents to $4.80 per bushel.
For 2023 soybeans, it was a similar tale: acreage down, yield up (0.7 bushels). Production increased by 36 million bushels with minimal changes were made to usage. So 2023-24 ending stocks moved up 35 million bushels (to 280 million) and USDA lowered its 2023-24 season average price to $12.75 per bushel (down 15 cents).
For 2023 corn, USDA raised its yield estimate by 1.9 bushels per acre (to 174.9 bushels per acre; Iowa’s estimate came in at 200, up a bushel). The yield change pushed production up by 170 million bushels. Feed usage was increased by 50 million bushels, as were exports, along with a 25 million bushel bump for ethanol. Thus, 2023-24 ending stocks increased by only 45 million bushels. Given the larger stocks, USDA decreased its 2023-24 season average price to $4.85 per bushel (down 10 cents).
For 2023 soybeans, USDA raised its yield estimate by 0.3 bushels per acre (to 49.9 bushels per acre; Iowa’s estimate remains at 58). The soybean production estimate rose by 25 million bushels. Seed and residual usage was decreased by less than 1 million bushels. There were no other changes to soy usage. So 2023-24 ending stocks increased by 25 million bushels to 245 million. USDA maintained its 2023-24 season average price at $12.90 per bushel.
For the 2024 crops, USDA has lower corn planting, higher soy planting, continuing struggles to boost usage leading to higher ending stocks, and lower prices across the board.
September brings new data sources for yield surveys, with USDA releasing adjustments to national corn and soybean production numbers. Last year, both crops saw planted area reduction, but this year they had an increase: corn had an added 772,000 acres and soybean’s total planted area increased by 95,000 acres. Crop yields have been impacted by heat and drought conditions, with national average corn yield estimate falling by 1.3 bushels per acre. However, corn production is predicted to slightly increase, adding 23 million bushels more than last year. The soybean yield estimate came in at 50.1 bushels per acre, still above last year. The eastern US forecasts record soybean yields, yet overall national production trails last year’s by 130 million bushels. The USDA projects corn and soybean prices at $4.90 and $12.90 per bushel respectively for 2023-24. Read the latest newsletter article from Chad Hart, or listen to the latest Market Outlook video for further insight on outlook for this month.
Iowa State University Extension and Outreach Farm Management Specialists provide expertise regarding crop insurance and adverse events. Losses due to adverse weather conditions such as hail, frost, freeze, wind, drought, and excess moisture are insurable losses under multiple peril crop insurance. In 2021, the impact of drought conditions has continued for much of Iowa. Losses due to drought are an insurable loss under multiple peril crop insurance. Another dynamic added to the mix is yield loss due to chemical drift, which is not a covered loss under multiple peril crop insurance.
Question: How many of Iowa’s corn and soybean acres are covered by crop insurance?
Iowa farmers planted 23 million acres of corn and soybeans in 2021. Approximately 90% of those acres have been insured using Revenue Protection (RP) multiple peril crop insurance. These insurance policies can guarantee various levels of a percentage of the farm’s average yield times the higher of the projected price (average futures price in the month of February) or the harvest price (average futures price during the month of October), using the November 2021 futures contract for soybeans and the December 2021 futures contract for corn. Most farm operators carry a guarantee of their APH from 65% to 85% level of coverage. The projected prices (futures average prices in February 2021) were $4.58/bu for corn and $11.87/bu for soybeans, respectively.
Question: What should an insured farmer do once a crop loss is recognized?
Notify the insurance agent within 72 hours of the discovery of damage, but not later than 15 days after the end of the insurance period. A notice of loss can be made by phone, in writing or in person. Although drought loss is not immediate, farmers should contact their agent as soon as they feel a loss is present.
Continue to care for the crop using good farming practices and protect it from further damage, if possible.
Get permission from the insurance company, also referred to as your Approved Insurance Provider (AIP), before destroying or putting any crop to an alternative use.
Question: Who will appraise the crops and assess the loss?
The crop insurance company will assign a crop insurance adjuster to appraise the crop and assess the loss. The insured farmer must maintain the crop until the appraisal is complete. If the company cannot make an accurate appraisal, or the farmer disagrees with the appraisal, the company can have the farmer leave representative sample areas. These representative sample areas of the crop are to be maintained – including normal spraying if economically justified – until the company conducts a final inspection. Failure to maintain the representative sample areas could result in a determination that the cause of loss is not covered. Therefore, no claims payment to the producer. Once appraised the crop can be released by the company to be:
Destroyed – through tillage, shredding, or chemical means; or
Used as silage or feed.
Question: Once released, may I harvest my corn as silage for feed?
Check with your crop insurance company. In a county where corn can be insured as grain only, the corn will be released, or harvested as silage or sold as feed. Any grain will be counted as production for your claim. In a county where corn can be insured as silage, the harvested silage will be counted as production.
Question: What is the difference among insurance units?
Many farmers have chosen to insure their crops using enterprise units in order to pay less expensive insurance premiums. Under enterprise units, losses are calculated by crop by county. Therefore all the corn planted by a farmer in a given county would be added together to determine a loss. If a farmer has chosen optional units, then losses are calculated by crop by field unit. Premiums are typically higher if choosing optional units but a good yield on one field does not cancel out the loss on another field.
Question: When will farmers be receiving indemnity payments for their crop insurance losses?
Adjusters will be busy with the increase in losses in areas that have been impacted. As soon as you are finished harvesting notify your insurance agent and an adjuster will be assigned to you. Insurance companies cannot defer payments to the next tax year, but claims adjusted late in the year may not be paid out until the following year.
Question: What is the maximum price that the harvest time indemnity price (average October futures price) can reach?
The maximum harvest indemnity price values for 2021 are twice of the projected price; or $9.16/bushel for corn and $23.74/bushel for soybeans, respectively.
Question: Can indemnity payments be deferred for income tax purposes until 2022?
A taxpayer using the cash method of accounting claims the income in the year they receive the payment. The insurance company will send the insured a 1099 form showing the amount and tax year to report the income. A farmer, if they are using the cash method of accounting for reporting taxes, can elect to defer crop insurance payments if the loss is due to yield loss and they normally sell more than 50% of their crop the year following harvest. They cannot defer any loss that is due to price loss. Farmers that are using the accrual method of accounting for reporting taxes cannot defer crop insurance payments.
Question: Will I be asked to provide proof of my bushels this year for crop insurance verification?
All multiple peril crop insurance users are subject to production verification on a random basis. If a claim that exceeds $200,000 is filed for an individual crop and policy, verification of production is automatically required by regulation. This also requires a 3-year audit.