|
| Given that the price of Nov. 18 soybeans has been bouncing around between 8.60 and 8.80 so far during the price discovery period, the question arises, " just how much are the crop insurance companies on the hook for anyways"? Let's assume the discovery price ends up at $8.70.
Well, the national APH calculated from the national yield for the past ten years is 45 bushel. Given that the spring ins. price was $10.19 then the average national gross revenue would be $458.55. I don't know but I would guess that most people who take revenue protection, take it at the 75 to 85% level, so let's say the average is 80%.
So, 80% of 458.55 is $366.84. But the USDA is saying the average yield will be 51.6 bpa so the gross revenue would be $448.90.
I think that means most of us will be out of luck. Assuming that 51.6 bpa what futures price would have generated an insurance check, $366.84/51.6 or less than $7.10 per bushel. Obviously everybody's situation is different but insurance companies work off the averages so I think they are actually in pretty good shape.
I guess this argues against any insurance company futures price manipulation, this year anyhow.
This is where the soybean wide soybean basis works against the producer this year. Below is graph of soybean of the Ill. terminal basis stolen from Farm Futures. It shows that a little earlier the soybean basis was in the 70 cent range as opposed to the more normal 30 cents. Assuming a more normal basis then maybe Nov 18 futures would be in the 8.00 to 8.30 range, still too high for a claim but closer.
 (Illinois soybean basis (full).png)
Attachments
----------------
 Illinois soybean basis (full).png (37KB - 65 downloads)
| |
|
Just how much are the Crop Ins. Comp's on the hook for ?
