Market Matters Blog
Katie Micik DTN Markets Editor

Monday 03/03/14

Can Crop Insurance Guarantees Sway Acreage?

Now that we're finally into March, we have one more piece of information about next year's crop: spring insurance guarantees. While these numbers will vary somewhat by state, and will be finalized by RMA this week, the average price in February gives us a little perspective on the year ahead.

"Probably the most interesting thing is the difference between 2013 and 2014," DTN Senior Analyst Darin Newsom said. "This year's corn average $4.62, or 82% of last year's $5.65. Is $4.62 still a profitable level? On the other hand, Dec corn is rallying and looks to approach $5.00+ in the near future. If the guaranteed floor is still profitable, and marketing can be done at higher levels, will we see the big switch in acres this year or will it wait until 2015?

"As for beans, Nov averaged $11.36, or 88% of last year's $12.87. The Nov bean/Dec corn ratio may favor beans slightly, coming in at 2.5:1 in 2014 vs. 2013's 2.3:1."

There was lots of discussion of the Nov bean/Dec corn ratio at Commodity Classic last week, but it didn't reveal any clear trend. Some farmers were going to stick to their rotation. Some were going to move some corn-on-corn acreage to beans this year. And some were going to increase soybean plantings. One analyst estimated the switch could be as much as 10% based on his conversations at Classic.

Is the crop insurance guarantee enough to keep corn acres near 2013 levels? Or will the profit potential in soybeans outweigh the potential marketing opportunities of $5 corn? I don't pretend to have an answer, and I have a feeling the only people with a strong inkling are farmers and seed salesmen.

2014 CZ14 SX14 MWU14
3-Feb 453 1108.5 620.5
4-Feb 459.25 1110.5 633
5-Feb 457 1112.5 635.5
6-Feb 458.25 1118.5 629
7-Feb 460 1121.75 629.5
10-Feb 458.25 1116.25 635.25
11-Feb 455.75 1123.5 644
12-Feb 457.75 1118.75 657.75
13-Feb 456.25 1133.75 652.75
14-Feb 459.75 1130.5 654.75
18-Feb 463.75 1138 664.5
19-Feb 468.25 1138.5 669
20-Feb 468.75 1145.25 669.5
21-Feb 464.25 1153.75 659.75
24-Feb 465 1160.25 668.75
25-Feb 467.75 1167.5 673.5
26-Feb 466.5 1169.25 665.5
27-Feb 461 1155.5 651.75
28-Feb 471.5 1169.25 662
Average 462 1136 651
2013 565 1287 844
82% 88% 77%

(ES/CZ)

Posted at 10:58AM CST 03/03/14 by Katie Micik
Comments (3)
Katie,my acres were set back in the fall when I planted wheat as I will double crop with soybeans.Double crop grain sorghum I have ruled out.Soybeans look to be the best money. I will have about 20% more bean acres. I try to spread my work load so I can't shift to many acres. I enjoy your articles.
Posted by WARREN HARDY at 6:34AM CST 03/04/14
I think weather is going to impact plantings more the insurance.Here we are first week of March and we have 3 ft. of snow in the fields in places.It is cold all the way to Texas, and won't they be thinking of planting soon? We are going to go from snow to mud because there is not any frost in the ground,Witch is not a bad thing I just don't know when we will be able to topdress wheat or get on the fields. So it could get late for corn in some places.
Posted by Raymond Simpkins at 7:03AM CST 03/04/14
4.70 corn is much better than 11.50 beans for me, will stay with more corn if weather cooperates
Posted by Tom Keller at 7:14PM CST 03/04/14
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