MT. JULIET, Tenn. (DTN) -- The fall price of corn in crop insurance calculations will be the highest since 2012 at $6.86. That's almost a dollar higher than spring's projected price and marks the third consecutive season of higher prices at harvest.
On soybeans, spring's projected price of $14.33 per bushel bests the $13.81-per-acre harvest price, which is the average of the November soybean contract's closing value each day during October. For corn, the December contract is used in calculations.
Revenue protection policies use the higher of the projected price or the harvest price to calculate revenue guarantees unless the farmer opted to exclude the harvest price as a way to lower premiums. Revenue guarantees are determined by multiplying the higher of the projected or harvest price by the farm's actual production history (APH) yield and the chosen coverage level, which typically ranges from 75% to 85% across the Corn Belt.
DTN Lead Analyst Todd Hultman said the higher harvest price for corn might benefit some farmers who had fields flattened by hail or severely curtailed by drought. But the higher harvest price might limit indemnities in areas where losses weren't as great.
To trigger an indemnity payment, the revenue guarantee must exceed the actual revenue, which is calculated using the farm's actual yield and the harvest price.
USDA anticipates that farmers will harvest 13.9 billion bushels of corn this year with a national average yield of 171.9 bushels per acre. That's a far cry from 2012, when a devastating drought scorched crops nationwide and pushed the harvest price from crop insurance to $7.50 per bushel for corn. At that time, farmers had to opt-in and pay up to use the harvest price in revenue calculations. Still, insurance providers paid out more than $17 billion in indemnities.
Hultman said that level of indemnity payments won't be seen this year, but rising prices at harvest highlight volatility in the corn market, which is only enhanced by Russia's war on Ukraine.
"In this time, when world grain supplies are so tight and so desperately needed, crop insurance protection is really serving the larger public well in continuing to give producers good incentive to plant," he said, adding that winter wheat is a great example.
That crop's projected prices were set in September, and at $8.79 per bushel, it's the highest in more than 20 years.
"That's what's keeping winter wheat being planted this year," he said.
Hultman said the corn crop suffered more from drought conditions than soybeans did this year, with August rains riding to the rescue of some crops. UDSA forecasts soybean production at 4.3 billion bushels with a national average yield of 49.8 bpa.
"We're not that far off from having another big or close-to-record crop in soybeans. Soybeans prices are significantly higher than they were a year ago, even though they're down from spring highs," Hultman said. In 2021, the spring price for soybeans was $11.87 per bushel, and it climbed to $12.30 by harvest time.
The projected price of soybeans -- $14.33 per bushel -- will be the second highest ever used in crop insurance calculations, falling shy of 2012's $15.39 per bushel harvest price.
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