Reuters / Crop insurance that guarantees prices for the 2013 growing season should encourage U.S. farmers to again plant a large number of acres, with soybeans possibly claiming ground from corn, analysts said.
The U.S. Department of Agriculture’s Risk Management Agency set the guarantees March 1, which act as the “floor price” for crop insurance policies, at $5.65 per bushel for corn and $12.87 a bushel for soybeans across most of the U.S. Crop Belt.
The prices are based on the average settlement for Chicago Board of Trade December corn futures and November soybean futures during the month of February.
“After last year’s experience with the drought, there is a high level of interest in crop insurance. The ability to essentially have a floor under it, at those price levels, is pretty attractive,” said Marty Foreman, an analyst with Doane Advisory Services in St. Louis.
Farmers can lock in a return of as much as 85 per cent of the 2013 floor price times their average yield through a variety of policies protecting them from a poor yield or a drop in farm gate prices.
The guarantees are roughly in line with the 2012 levels of $5.68 for corn and $12.55 for soybeans, but down from record-high values in 2011 of $6.01 for corn and $13.51 for soybeans.
Corn is typically a more profitable crop than soybeans.
But because the 2013 soybean price rose relative to corn, producers might be swayed to shift some acres from corn to soybeans, especially those who suffered yield loss from planting corn on the same fields for successive years instead of alternating with soybeans.
“I think the disenchantment with corn on corn might shift a few acres over to beans,” said Dale Durchholz, analyst with AgriVisor in Bloomington, Illinois.
“But as much as anything, it tells me I plant big acres again this spring. Then you can argue about what the mix is going to be,” he said of the price guarantees.
At its annual outlook forum last month, USDA projected 2013 U.S. corn plantings at 96.5 million acres, down slightly from the 97.2 million acres planted in 2012, a 75-year high.
USDA projected 2013 soybean plantings at 77.5 million acres, up from 77.2 million in 2012.
Planting season in the core Midwest Crop Belt is a little over a month away. The deadline to buy a crop insurance policy is March 15.