Chicago / Reuters / Crop insurance price guarantees for 2012 should encourage U.S. farmers to plant corn over soybeans, according to analysts.
The U.S. Department of Agriculture set the guarantees, which act as the floor price for crop insurance policies, at $5.68 per bushel for corn and $12.55 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 in February.
Farmers can guarantee a return of as much as 85 per cent of the 2012 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 down from the record-high 2011 levels of $6.01 for corn and $13.51 for soybeans. But the 2012 soybean price fell further than corn, a factor that could persuade farmers to shift some acres intended for soybeans over to corn.
“It’s a bright neon sign going on and off that says ‘plant corn,’” said Rich Feltes, vice-president for research with R.J. O’Brien in Chicago.
“It further buttresses the view that corn is king.”