2017 Revenue Protection Insurance Projected Prices For Corn And Soybeans And Safety-Net Decisions

By Todd Davis

Extension Economist, University of Kentucky

The projected prices for Revenue Protection (RP) crop insurance is established using the December 2017 corn and November 2017 soybeans futures contracts closing prices for the month of February.




The 2017 projected prices for corn and soybeans are $3.96 and $10.19 per bushel, respectively. The revenue guarantee provided by RP insurance for varying coverage levels are compared to the budgeted cost of production and the cost of production plus cash rent to analyze the risk protection provided by RP insurance.

The rainbow of colored columns in Figure 1 and Figure 2 represent the RP insurance revenue guarantees provided for the 2013 (dark blue), 2014 (dark red), 2015 (green), 2016 (orange), and 2017 (light blue) crop years. The multi-year comparison illustrates how the crop insurance safety net has declined over the last five years as ending stocks for corn and soybeans have rebuilt after the 2012 drought. The red line is the 2017 budgeted per acre input costs, and the black line is the input costs plus budgeted cash rent. The corn and soybean APH yields are 150 and 55 bushels/acre, respectively, for Figure 1 and Figure 2.



The projected price for corn at $3.96 would only be a $0.10/bushel increase over last year’s price and would be $1.69 per bushel below the guarantee in 2013 the year before the 2014 Farm Bill was signed into law (Figure 1). Figure 1 shows that the 2013 coverage may have been sufficient to provide a revenue guarantee that covered per acre input costs and cash rent, which is not the case this year. The $3.96 projected price provides a budgeted safety net that is $12/acre greater than the 2016 guarantee at the 80% coverage level (Figure 1).

Figure 2 demonstrates the potential for an improved revenue safety net for soybeans in 2017. The projected price for soybeans of $10.19/bushel is a $1.34/bushel increase over the 2016 price (Figure 2). The 2017 projected soybean price is $2.68/bushel lower than the 2013 insurance guarantee. Figure 2 suggests that a revenue safety net that covers total inputs and cash rent might be available at the 85% coverage level depending on the APH yield, cost of the insurance, and the farm’s cost structure. At the 80% coverage level, the 2017 revenue guarantee is $59/acre larger than last year (Figure 2).