Market Matters Blog
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?
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"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)
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