Working with a qualified crop insurance agent is essential to ensure producers receive the best coverage for their farms

DR. AARON SMITH

KOXVILLE, TENNESSEE

This week projected crop insurance prices were set for corn, cotton, and soybeans. The projected price for corn was up 1 cent compared to last year at $5.91; soybean price was down 57 cents compared to last year at
$13.76; and cotton was down 19 cents compared to last year at 84 cents. Wheat projected crop insurance price was set in September at $8.40. The crop insurance price sets the initial revenue guarantee, along with APH and buyup coverage level, for the insured unit for all revenue protection policies and can influence planting decisions through profitability analysis between crops. The 2.33 soybean -to-corn price ratio would favor corn planting; however high input costs likely remove this advantage for many producers. 

In addition to projected crop insurance prices, markets also determined price volatility factors for crop insurance. Higher price volatility factors result in higher premium prices, all else remaining equal. The volatility factor for corn was 0.18, down from last year’s volatility factor of 0.23; soybean’s volatility factor was 0.13, down from 0.19 last year; and cotton’s volatility factor was 0.22, the same as last year. As such, corn and soybean premiums, for the same coverage, will be lower for corn and soybeans (not accounting for other changes such as APH). 

Due to high production costs, it is advisable for producers to maintain or increase revenue protection crop insurance in most circumstances. Working with a qualified crop insurance agent is essential to ensure producers receive the best coverage for their farms. Sale closing dates for crop insurance in Tennessee is March 15. 

Corn

Ethanol production for the week ending February 24 was 1.003 million barrels per day, down 26,000 from the previous week. Ethanol stocks were 24.775 million barrels, down 0.813 million compared to last week. Corn net sales reported by exporters for February 17-23 were 23.5 million bushels for the 2022/23 marketing year and 0.7 million bushels for the 23/24 marketing year. 

Exports for the same period were up 3% compared to last week at 27.1 million bushels. Corn export sales and commitments were 60% of the USDA estimated total annual exports for the 2022/23 marketing year (September 1 to August 31) compared to the previous 5-year average of 77%. Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at Northwest, North-Central, and West-Central elevators and Barge points and strengthened at Northwest and Mississippi River elevators and barge points. Overall, basis for the week ranged from 45 under to 37 over, with an average of 13 over the May futures at elevators and barge points. May 2023 corn futures closed at $6.39, down 10 cents since last Fri- day. For the week, May 2023 corn futures traded between $6.22 and $6.52. July 2023 corn futures closed at $6.28, down 10 cents since last Friday. May/Jul and May/Dec future spreads were -11 and -68 cents. 

 New crop cash prices ranged from $4.89 to $5.88 at elevators and barge points. December 2023 corn futures closed at $5.71, down 5 cents since last Friday. Downside price protection could be obtained by purchasing a $5.80 December 2023 Put Option costing 48 cents establishing a $5.32 futures floor. 

Soybeans

Across Tennessee, average soybean basis weakened or remained unchanged at Northwest, West-Central, North-Central, and Mississippi River elevators and barge points and strengthened at West elevators and barge points. Basis ranged from 5 to 52 over, with an average basis of 28 over the May futures contract. Soybean net weekly sales reported by exporters were 13.3 million bushels for the 2022/23 marketing year – a marketing year low - and 4.9 million bushels for the 2023/24 marketing year. Exports for the same period were down 49% compared to last week at 32.4 million bushels. Soybean export sales and commitments were 90% of the USDA estimated total annual exports for the 2022/23 marketing year (September 1 to August 31), compared to the previous 5-year average of 86%. May 2023 soybean futures closed at $15.18, down 1 cent since last Friday. For the week, May 2023 soybean futures traded between $14.77 and $15.25. May/Jul and May/Nov future spreads were - 12 and -145 cents. July 2023 soybean futures closed at $15.06, down 2 cents since last Friday. 

 November 2023 soybean futures closed at $13.73, down 1 cent since last Friday. New crop cash soybean prices at elevators and barge points ranged from $13.16 to $13.94. Downside price protection could be achieved by purchasing a $13.80 November 2023 Put Option which would cost 79 cents and set a $13.01 futures floor. Nov/Dec 2023 soybean-to-corn price ratio was 2.40 at the end of the week. 

Cotton

Delta upland cotton spot price quotes for March 2 were 82.71 cents/lb (41-4-34) and 84.96 cents/lb (31-3-35). Adjusted world price (AWP) was up 1.95 cents at 72.73 cents. Cotton net weekly sales reported by exporters were net sales of 170,600 bales for the 2022/23 marketing year and 97,200 bales for the 2023/24 marketing year. Exports for the same period were up 7% compared to last week at 207,700 bales. Upland cotton export sales were 93% of the USDA estimated total annual exports for the 2022/23 marketing year (August 1 to July 31), compared to the previous 5-year average of 93%. May 2023 cotton futures closed at 84.17 cents, down 0.73 cents since last Friday. For the week, May 2023 cotton futures traded between 83.11 and 86.25 cents. July 2023 cotton futures closed at 4.79 cents, down 0.29 cents since last Friday. May/Jul and May/Dec cotton futures spreads were 0.62 cents and 0.09 cents. 

December 2023 cotton futures closed at 84.26 cents, down 0.06 cents since last Friday. Downside price protection could be obtained by purchasing an 85 cent December 2023 Put Option costing 8.11 cents establishing a 76.89 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were 10.4 million bushels for the 2022/23 marketing year and 0.6 million bushels for the 2023/24 marketing year. Exports for the same period were up 80% compared to last week at 22.4 million bushels. Wheat export sales were 82% of the USDA estimated total annual exports for the 2022/23 marketing year (June 1 to May 31), compared to the previous 5-year average of 94%. Wheat cash prices at elevators and barge points ranged from $6.42 to $7.10. May 2023 wheat futures closed at $7.08, down 13 cents since last Friday. May 2023 wheat futures traded between $7.01 and $7.24 this week. May wheat-to-corn price ratio was 1.11. May/Jul and May/Sep future spreads were 8 and 19 cents. 

New crop wheat cash prices at elevators and barge points ranged from $6.73 to $7.15. July 2023 wheat futures closed at $7.27, down 11 cents since last Friday. Downside price protection could be obtained by purchasing a $7.20 July 2023 Put Option costing 46 cents establishing a $6.74 futures floor. September 2023 wheat futures closed at $7.27, down 11 cents since last Friday. ∆

DR. AARON SMITH: University of Tennessee