Spring Price Discovery for Crop Insurance

Spring Price Discovery

Crop insurance revolves around two prices, the “Spring Projected Harvest Price” and the “Fall Final Harvest Price”. The “Spring Projected Harvest Price” is set using the average closing prices of the December corn contract and the November soybean contract during the month of February. The “Fall Final Harvest Price” is set by averaging the closing price of the same contracts during the month of October. RMA announces the “Spring Projected Harvest” for Revenue Protection (RP) and Yield Protection (YP) by March 5th. The “Final Harvest Prices” will be announced in early November. Last year the “Spring Projected Harvest Prices” were $3.86 for corn and $8.85 For beans. The “Final Harvest Prices” were $3.49 for corn and $9.73 for soybeans.

 

To set your crop insurance guarantee, the spring price is multiplied by your APH (actual production history). This number is then multiplied by the coverage level that you select. For example, in 2016 a common guarantee would have been $3.86 (spring price) X 215 (APH bushels per acre) X .80 (coverage level) = $663.92/acre.

 

In the fall, your actual harvest yield is multiplied by the harvest prices to set the value of your crop. If the value of your crop is less than the guarantee, you will be paid an indemnity.

Here are some recent graphs of the December CME corn contract and the November soybean contract.

December 2017 Corn

   

November 2017 Soybeans

Projected Spring Projected Harvest Prices and Final Harvest Prices from 2000 to 2016

To get a historical look at where spring and harvest prices have been, I have put together a chart that shows these prices since the year 2000.

 

                                             Corn                                            Soybeans

Year                      Spring                   Harvest                Spring                   Harvest

2000                     2.51                      2.11                      5.32                      4.72

2001                     2.46                      2.05                      4.67                      4.37

2002                     2.32                      2.52                      4.50                      5.45

2003                     2.42                      2.26                      5.26                      7.32

2004                     2.83                      2.05                      6.72                      5.26

2005                     2.32                      2.02                      5.53                      5.75

2006                     2.59                      3.03                      6.18                      5.93

2007                     4.06                      3.58                      8.09                      9.75

2008                     5.40                      4.13                      13.36                    10.36

2009                     4.04                      3.72                      8.80                      9.66

2010                     3.99                      5.46                      9.23                      11.63

2011                     6.01                      6.32                      13.49                    12.14

2012                     5.68                      7.50                      12.55                    15.39                   

2013                     5.65                      4.39                      12.87                    12.87                   

2014                     4.62                      3.49                      11.36                     9.65

2015                     4.15                      3.83                      9.73                      8.91

2016                     3.86                      3.49                       8.85                      9.73

 

Here we have put these prices into an Excel spreadsheet.

Graph of Spring and Harvest Prices since 2000 for Corn
Graph of Spring and Harvest Prices since 2000 for Soybeans

by Rich