US corn, soy crop insurance guarantees lowest in years

Credit: REUTERS/KAREN BRAUN

By Julie Ingwersen

CHICAGO, March 1 (Reuters) - Crop insurance policies that guarantee prices for the 2024 growing season are the lowest since 2021 for corn and the lowest since 2020 for soybeans, reflecting ample supplies of those crops left from last year's harvest and soft demand, analysts said.

Crop insurance policies can influence which crops farmers choose to plant in the spring, but soy and corn futures prices hovering around three-year lows leave them with few good options this year and the U.S. Department of Agriculture has warned of a sharp drop in farm income.

The USDA set the guarantees, which act as a floor price below which farmers with insurance can receive payments, at $4.66 per bushel for corn and $11.55 a bushel for soybeans across most of the U.S. crop belt. The prices reflect the average settlement for Chicago Board of Trade December corn CZ24 and November soybean futures SX24 during the month of February.

The insurance guarantee for spring wheat was $6.84, down from $8.87 a year ago, based on the average price of Minneapolis Grain Exchange September MWEU24 spring wheat futures during February.

The base price for corn is down from $5.91 in 2023 and the lowest since the 2021 price projection of $4.58. The soybean price is down from $13.76 in 2023, the second-highest on record after the peak insurance projection of $14.33 in 2022.

The USDA last month projected that U.S. farmers would plant 91 million acres (36.8 million hectares) of corn in 2024, down from 94.6 million acres in 2023, and 87.5 million acres of soybeans, up from 83.6 million last year.

Some analysts are skeptical of a big expansion in soybean plantings, which will be needed as the U.S. renewable diesel sector expands.

The price ratio between new-crop soybeans to new-crop corn typically needs to be 2.5-to-1 or higher to entice farmers to add more soybeans, but the ratio for the USDA's insurance guarantees is only 2.48-to-1.

"These price ratios aren't very exciting," said Jerry Gidel, analyst with Midland Research. He said the guidance could prompt a modest switch to soybeans over corns, but was unlikely to encourage the nearly 4-million-acre increase that USDA had forecast.

(Reporting by Julie Ingwersen; Editing by Josie Kao)

((Julie.ingwersen@thomsonreuters.com; 1-313-484-5283; Reuters Messaging: julie.ingwersen.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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