Ag Market Outlook, November 13, 2023 with Chad Hart

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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.

February’s WASDE Report Had Few Crop Demand Adjustments (2/11/20)

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Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest WASDE report.

February’s WASDE report had the potential for some fireworks, as it was the first major update since the signing of the Phase One trade deal with China and the outbreak of the coronavirus. But those fireworks did not materialize as USDA made relatively few adjustments, with those adjustments firmly supported by current trade and usage data. For corn, the two moves of note essentially offset each other. Corn exports were lowered 50 million bushels, as export sales continue to struggle. But corn usage for ethanol was raised 50 million bushels, as weekly ethanol production and monthly corn processing data shows increased usage.  With the offsetting moves, the 2019/20 corn ending stocks estimate remains at 1.89 billion bushels and the 2019/20 season-average price estimate holds at $3.85 per bushel. For soybeans, the only shift came from exports. USDA raised soybean exports by 50 million bushels, based on larger year-over-year sales to China. While that lowered the 2019/20 soybean ending stocks estimate to 425 million bushels, the 2019/20 season-average price estimate was lowered to $8.75 per bushel, reflecting the softer prices on the soybean market throughout January.

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Estimating Crop Insurance Indemnity Payments

Contributed by Steve Johnson, Extension Farm Management Field Specialist,

Johnson_Steve_smHarvest prices determined in October will have a large impact on the size of the potential crop insurance indemnity payments for corn and soybeans. Current futures prices suggest that crop insurance revenue policies on corn will make indemnity payments on some farms, particularly those that purchased revenue policies at high coverage levels and are experiencing yields below their Actual Production History (APH). In Iowa, there’s a better chance for insurance indemnity payments on corn than there is for soybeans this fall. It would likely take a significant drop in soybean yields to likely trigger such a payment.

Crop Insurance Indemnity Payments

The 2013 projected price for corn is $5.65 per bushel. That’s the average settlement price of the December Chicago Mercantile Exchange (CME) corn futures contract during February. This projected price is used to set crop insurance guarantees and the premium paid by farmers. The harvest price is used to calculate revenue on which crop insurance indemnity payments are based. The harvest price for corn equals the average of settlement prices of the December CME corn futures contract during October. Settlement prices during the first 10 days of October suggest a harvest price of $4.40 per bushel. The final harvest price can vary before the end of the month, but this number provides a good starting point for evaluating corn payments.

An estimate of a $4.40 harvest price is 78% of the $5.65 projected price ($4.40 harvest price divided by $5.65 projected price = 78%). If actual yield equals the guarantee yield on revenue polices of an 80% level or greater coverage levels, it will likely trigger an indemnity payment. So an actual yield that falls 22% or more below the APH should command attention by the farmer. They will need to notify their crop insurance agent and make sure good records can verify this actual yield.

The projected price for soybeans is $12.87 per bushel. That’s the average settlement price of the November CME soybean futures contract during February. The first 10 days of settlement prices during October for November soybean futures suggest a harvest price of $12.75 per bushel. Similar to corn, the soybean harvest price is not yet known, but $12.75 is a useful starting point for evaluating a potential insurance indemnity payment on soybeans.

A $12.75 harvest price is 99% of the $12.87 projected price. Because 99% is above coverage levels offered by crop insurance revenue products, a yield loss has to occur before crop insurance indemnity payments would be made. Since corn and soybean yields will vary across farms and most farmers use enterprise unit coverage, crop insurance indemnity payments will also vary. A farmer should contact their crop insurance agent regarding the actual yield records necessary for an indemnity claim, updating their APH with this year’s harvest numbers or making their 2013 premium payment.

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