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Revenue protection insurance favors soybeans for second year

Revenue protection insurance favors soybeans for second year

Revenue protection insurance favors soybeans for second year

For the second year, soybeans appear to be the better option when it comes to growers purchasing revenue protection insuarance.


As the March 15 decision deadline approaches for revenue protection insurance, grain farmers are faced with a similar situation as in 2017, with the market continuing to favor soybeans, said Todd Davis, agricultural economist in the University of Kentucky College of Agriculture, Food and Environment.

The safety net, also known as a revenue guarantee, is established at the end of each February based on futures prices for the December corn and November soybean contracts. The 2018 prices are $3.96 per bushel for corn and $10.16 per bushel for soybeans. Prices are unchanged from 2017 for corn and down 3 cents for soybeans compared to last year.

“While revenue protection insurance will not cover all losses for either crop, producers are likely to recover between $60 and $80 more per acre on soybeans depending on coverage level purchased,” Davis said.

Davis used Kentucky’s historical average soybean farm yield of 55 bushels per acre, average total input costs and average cash rent prices in the estimated calculation. He said the risk protection provided by the insurance will vary by farm based on each farm’s cost structure, actual input prices and cash rents paid, yields and the cost of the insurance.

More risk protection coverage comes at a cost, however.

“Producers should work with their insurance agent to understand the potential revenue protection benefits versus the cost of increased coverage for corn or soybeans,” Davis said.

The 2018 corn crop insurance price would result in losses of more than $100 per acre despite the coverage level based on University of Kentucky corn budgets.

“There hasn’t been much change in the corn safety net this year,” Davis said. “At 75-percent coverage level, corn will still net a loss of $183 per acre while the soybean loss would be $104. Managers should consider all risk management alternatives available to manage their business in this period of tight profit margins.”

Crops Economics Extension

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