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October crop insurance prices remove market floor

An agricultural economist says the October crop insurance prices aren’t favorable for producers.

Brian Basting, with Advance Trading, says the low averages of the December futures in October removed the market’s floor.

“This year, the vast majority of producers are not going to get an indemnity.”  He says, “Not all, but vast majority because the yields have been so high.  That crop is vulnerable to the downside. The last backstop, if you will, was the October crop insurance harvest price.”

He tells Brownfield farmers can put some strategies in place to minimize risk.

“The importance of getting control of these 2024 bushels.”  He says, “Getting a floor underneath them.  One way or another.  You can do that, a couple of examples, one would be a minimum price contract or the purchase of a put option, but leave the upside open.”

Basting says 2023 was a good example of the importance of setting a floor as markets only moved sideways or lower the rest of the year after the fall crop insurance price was set.  

AUDIO: Brian Basting – Advance Trading