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Mixed crop insurance prices for the growing season

The Vice President of Farm Services at NAU Country Insurance says crop insurance prices are a mixed bag for the upcoming growing season.

Rich Morrison says the prices, set in February, are used to determine revenue guarantees for the entire year for farmers who choose revenue protection.

“For corn, we ended up at $5.91 per bushel. Soybeans are at $13.76 per bushel. Cotton is at 84 cents per pound and sorghum is at $5.85 per bushel.”

Revenue protection insures farmers against yield losses from natural causes like drought or disease and revenue losses caused by a change in the harvest price from the projected price. Farmers can choose the higher price to be paid for crop losses, selecting either the February base price or the October harvest price.

Morrison says it wasn’t as volatile of a market in February and that should benefit farmers.

He explains the volatilty factor for price is based on option volatility. “We know the markets for the last several weeks have been flat and consequently, the volatility factors are very low this year. That cheapens up the cost of insurance,” says Morrison. “In a more volatile year, when the markets are gyrating a lot, like last year, where corn had to rally sharply to get to $5.90 in February, the volatility was high and consequently, insurance prices went up.”

“Our volatility factor this year was five points less for corn and six points less for soybeans than it was last year,” he says. “That usually means savings of $1 to $1.50 per point of volatility. Farmers are going to save $5 to $8 per acre on their insurance premium for the same insurance they bought last year.”

The deadline for Midwest farmers to sign-up for revenue protection is March 15.

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