MT. JULIET, Tenn. (DTN) -- The average daily close of the December corn futures contract was $4.88 during October, while the November soybean contract was $12.84 per bushel.
The averages are an important piece of price discovery that underpins many crop insurance policies, which use the higher of either the harvest price or the spring projected price to calculate indemnity payments. The projected prices are an average of the new-crop futures contracts' closes during February. They came in at $5.91 per bushel of corn and $13.76 per bushel of soybeans.
For corn, this breaks a three-year streak of higher corn prices at harvest.
DTN Lead Analyst Todd Hultman said the deterioration of corn prices over the growing season will likely trigger payments on 85% coverage policies without a yield loss. At lower coverage levels, which usually range between 70%-80%, farmers will also likely need a yield loss to trigger a payment. For more detailed analysis on what combinations of yield and price will trigger payments, please read "Crop Insurance Looks to Pay Out in 2023" here: https://www.dtnpf.com/….
"This year, a lot of acres swung to corn," Hultman said. In June, USDA said farmers planted 94.1 million acres of corn. The agency's Prospective Plantings survey in March only indicated 92 million would go to corn production. "A lot of comments seem to think that was because the crop insurance protection was so high. While that's true, it still would have been better to stay with a 50-50 rotation because soybeans ended up being profitable. Fundamentals do matter."
Hultman said that USDA estimates it cost $5.13 to raise a bushel of corn in 2023, compared to $12.53 per bushel of soybeans. USDA will release cost of production estimates for 2024 in mid-November.
"As we look forward to next year, we're going to be looking at a lower February average, most likely," he said, adding that weather in Brazil will be a dominant factor. "It's going to be a tougher situation to protect costs."
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