Crop Insurance Market Updates
Protecting Margins for the 2022 Crop Year
Commodity prices began to rise last winter as producers were making their 2021 crop insurance decisions. At that time, many producers wondered how they could expand their insurance coverage while prices expanded. Many traditional crop insurance products limit coverage at 85% of a producer’s historical production or revenue, leaving a gap that producers are eager to fill. The following Crop Risk Services (CRS) products and scenarios may help provide guidance:
- Revenue Boost – Alleviates the insurance coverage gap by protecting more margin where federal crop insurance stops, up to 95%.Example: A 200 bu APH producer with 85% MPCI coverage would have had a $779 MPCI guarantee this spring. By adding a Revenue Boost policy on top of their MPCI coverage, that producer would have increased their guarantee to $870/ac – helping to protect more margin.
- (NEW) Revenue Max endorsement to the Revenue Boost policy — Gives the producer four additional pricing periods to increase coverage in their Revenue Boost policy. CRS strategically chose four two-week periods during peak grain marketing months of June and July to offer within the Max endorsement.Example: Now that the month of June has passed, we can see the Revenue Max Endorsement paid off – having reached the $1 and $2 max limits, respectively on corn and soybeans in the first pricing period. To put the value of the Max endorsement into perspective, had the same 200 bu APH producer above elected the Revenue Max endorsement, their revised guarantee would now be $890/acre.
As we shift our focus to the 2022 crop year, producers may want to take advantage of the strong, current grain prices to set their guarantee for next year’s crop insurance coverage. CRS’s Revenue Net policy can help by allowing producers to purchase additional price protection up to seven and a half months earlier with their MPCI Revenue Protection policy.
Settlement prices are determined during 15 bi-monthly price discovery periods, ranging for corn and soybeans from July 1 to February 15. Four of the last six years, the July 1-15 pricing period has provided the top corn settlement window of the Revenue Net policy, while two of the last five years that’s been the case for soybeans.
Producers looking for an affordable and cash flow-friendly opportunity to protect margins for 2022 should consider Revenue Net as a part of their risk management plan.
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