MT. JULIET, Tenn. (DTN) -- Crop insurance will provide better risk protection for corn growers this year, which leaves farmers exposed to heavier losses on soybeans and supports ideas that farmers could plant up to 94 million acres of corn in 2025.
The spring projected prices, which are computed using the average daily close of the November soybean or December corn futures contracts during February, form a key component of revenue protection crop insurance, the type of federally subsidized policy purchased by most commercial row-crop farmers.
For 2025, the spring projected price for corn is $4.70 per bushel, up 4 cents from last year, while the soybean projected price is $10.54, $1.01 lower than last year. Projected prices for spring wheat are $6.55 per bushel, 30 cents less than last year.
Farmers purchase a range of coverage, usually between 70% and 85%. Along with their farm's actual production history (APH) yield, the projected price and coverage level are used to determine a revenue guarantee.
In the case of an 80% coverage policy, indemnities would begin to pay without yield losses when corn prices hit $3.76 or soybean prices dip below $8.44 per bushel.
USDA estimates it will cost an average of $871 per acre to grow corn in 2025, and using USDA's trendline yield estimate of 181 bushels per acre, that implies a break-even price of $4.73 on corn.
"Obviously, given where we are today and with a lot of weather ahead, it's not all that attractive of a level of protection, and it would take a pretty serious drop to trigger any sort of indemnity payment," DTN Lead Analyst Rhett Montgomery said.
Crop insurance helps farmers define worst-case scenarios so they can make better plans to manage their risk. Essentially, he said crop insurance works like a put, covering all losses after prices hit a pre-designated floor.
In this year's case, the corn protection is about equivalent to last year, while farmers will be responsible for a larger share of losses on soybeans. Soybeans' cost of production is about equivalent to last year, averaging $625 per acre. If farmers grow an average of 52.5 bpa like USDA anticipates, that implies a break-even price of $11.90, significantly above current market prices but nowhere near levels that would trigger a payment.
Montgomery said the poor profitability picture for soybeans is one reason why he thinks early planting estimates heavily favor corn. USDA's initial estimates, released at its annual Agricultural Outlook Forum, called for 94 million acres of corn, up 3.4 million acres from 2024. Soybean acreage is forecast to fall 3.1 million acres to 84 million acres.
"The difficult thing is that none of these commodities are really profitable right now," Montgomery said. "Corn has offered the best chance to beat the close, to break even, compared to soybeans or spring wheat, but it's not really giving positive returns right now."
He thinks farmers will plant more corn acres this spring but is unsure if it will make it to USDA's 94-million-acre estimate. (You can read more on that story here: https://www.dtnpf.com/….)
He encourages farmers to be on the lookout for opportunities to lock in a higher price floor, potentially with a put option, in the April-to-June time frame, which better aligns with seasonal highs in the market.
Montgomery said he looked at data back to 1994, and the December corn contract never made its high during February. The November soybean futures contract only made its high in February once.
"The odds are still in favor of some sort of weather rally," he said. It's up to farmers to be prepared to make sales when it happens.
Katie Dehlinger can be reached at katie.dehlinger@dtn.com
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