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Market rally likely to reduce some producer payments

An ag economist with the University of Illinois says the recent rally in the commodity markets could impact crop insurance payouts this year.

During a recent FarmDoc webinar, Gary Schnitkey says if prices remain at current levels or higher through October, insurance payments will decline.

“We’ll have a projected price above $4.62, and we’ll need yield bosses on revenue protection policies and ECO and SCO.”  He says, “That could happen, I suppose, in some counties.  “Remember that that’s a county level product.”

He says ARC & PLC payments for the 2025 crop season, which are to be received this October, could also be reduced.

“And there is a potential for it to have a small impact on the ARC and PLC payments.”  He says, “Remember, the marketing year runs from September to August. So, some of those August cash prices are going to be higher. Very small impact.”

Schnitkey says the adjustments are a product of the program, and suggests producers take advantage of the rally to lock in what should be above break-even prices for most.