Every year the Agriculture Department’s Risk Management Agency recalibrates crop revenue protection insurance policies to reflect updated market expectations of prices, price risk and revenue per acre. The crop insurance prices are determined by averaging Chicago Board of Trade (corn and soybeans) and Intercontinental Exchange (cotton) futures contract settlement prices during a month-long price discovery period.
Spring prices for corn, cotton and soybeans are determined by averaging the new-crop futures contract settlement prices (December for corn, November for soybeans and December for cotton) during the month-long February price discovery period. Following the spring price discovery period, farmers may purchase revenue protection policies that provide insurance against yield declines. In the event of a crop loss, a farmer purchasing a harvest price option policy would be indemnified at the higher of the spring planting price or the price during harvest. Farmers without the harvest price option would be indemnified at the spring planting price.
At the end of February, USDA’s Risk Management Agency showed “in discovery” spring prices for corn, cotton and soybeans at $3.96 per bushel, 76 cents per pound and $10.16 per bushel, respectively. The spring price for corn is unchanged from 2017 and the soybean price is down 3 cents per bushel from 2017. The soybean-to-corn spring price ratio remains at 2.57, in line with last year and well above the 20-year average of 2.25. For cotton, the spring price was 2 cents per pound above last year’s spring price and the highest spring price since 2014.
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