Improved crop prices a boon, but will push down insurance payments

By Kent Thiesse

Since September 1, there has been some noticeable improvement in both the Chicago Board of Trade and local corn and soybean prices in the Midwest. Those price improvements, as welcome as they are to farmers, will have a negative impact on possible insurance payments.

The increased is certainly welcomed by producers that were facing crop prices well below breakeven in early September. With below-average crop yields in many areas, however, there are still likely to be some significant financial challenges.

The CBOT 2019 December corn futures price improved from below $3.60 per bushel in early Sept. to 

over $3.90 per bushel during October. The CBOT price improvement, together with a tighter local basis in many areas, resulted in improvements in the local cash corn market of over 50 cents per bushel at some locations. 

The CBOT November soybean rose from near $8.60 per bushel in early September to near $9.35 per bushel during October. Local cash soybean prices for fall delivery have improved by similar levels during that time frame, as the soybean basis levels have not changed significantly in recent months.

Those increases will push down potential insurance payments. As of October 28, the crop insurance harvest price estimates were $3.90 per bushel for corn and $9.26 per bushel for soybeans, up from. $3.70 per bushel for corn and $8.80 per bushel for soybeans at the beginning of the month. (Prices for Revenue Protection policies, which represent more than 90 percent of policies for corn and soybeans in the Upper Midwest, are finalized Nov. 1). 

The increase will likely lower comparable crop insurance indemnity payments by about one-third. Similarly, the soybean harvest price enhancement during October will reduce potential soybean crop insurance indemnity payments by about 20 percent.

For example, if a producer with an RP insurance policy has an APH corn yield of 190 bushels per acre with an average 2019 corn yield of 150 bushels per acre, then based on the October 1 corn harvest price of $3.70 per bushel, the gross crop insurance indemnity payment (prior to premium deductions) would have been about $91 per acre. However, when the corn harvest price is increased to the current estimate of $3.90 per bushel, the gross indemnity payment is reduced to $61 per acre.  

With Federal Crop Insurance, every year is different, and with the multiple options available to producers, there are many variable results from crop insurance coverage at harvest time. Producers that have crop revenue losses in 2019, which could result in potential crop insurance indemnity payments, should properly document the yield losses, regardless of their type or level of insurance coverage. 

A reputable crop insurance agent is the best source of information to make estimates for potential 2019 crop insurance indemnity payments, and to find out about documentation requirements for crop insurance losses. It is important for producers who are facing crop losses in 2019 to understand their crop insurance coverage and the calculations used to determine crop insurance indemnity payments. 

Farm operators that are in areas with delayed or difficult harvest conditions for corn and soybeans should be aware that they may need to request additional time to complete harvest, in order to maintain their crop insurance coverage. 

The 2019 crop insurance period ends on December 10, which is also the deadline to have 2019 corn and soybeans harvested for crop insurance purposes. Producers that can not meet this deadline due to excessive moisture and poor field conditions should contact their crop insurance agent to be allowed extra time to complete corn and soybean harvest. This will allow for 2019 crop insurance coverage to be maintained. 

Kent Thiesse has prepared an Information Sheet titled “2019 Crop Insurance Payment Potential”, which is available by contacting : The University of Illinois FarmDoc web site also contains some good crop insurance information and spreadsheets to estimate crop insurance payments. The insurance information on the FarmDoc web site is located at:

For additional information email Kent Thiesse, Farm Management Analyst and Senior Vice President, MinnStar Bank, Lake Crystal at  
To subscribe to BankWise for weekly Ag Lending News updates email Kristi Ploeger or call 651-789-3997. 

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