1 / 28

February 2012

February 2012. Steven D. Johnson Farm & Ag Business Management Specialist (515) 957-5790 sdjohns@iastate.edu www.extension.iastate.edu/polk/farmmanagement. Presentation Objectives. Highlight 2011 Crop Insurance Coverage

mateo
Download Presentation

February 2012

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. February 2012 Steven D. Johnson Farm & Ag Business Management Specialist (515) 957-5790sdjohns@iastate.edu www.extension.iastate.edu/polk/farmmanagement

  2. Presentation Objectives Highlight 2011 Crop Insurance Coverage Review Crop Insurance Changes for 2012 and Related Decisions before March 15th Discuss the New Trend-Adjusted Yield Endorsement and Historical Projected vs. Harvest Prices Highlight 2012 U.S. Planted Acreage Forecasts and Impact of Weather Discuss Marketing Strategies that can Leverage Revenue Protection Coverage Summarize 5 Crop Insurance Strategies & 5 Related Crop Insurance Web Sites

  3. Iowa Corn & Soybean Insurance Coverage (2011) Revenue Protection = 88.5% of Insured Acres Source: USDA Risk Management Agency, September 2011

  4. Level of Coverage - Iowa Corn & Soybean 2011 Acres 33.20% 32.93% 28.73% 27.50% 16.66% 15.23% 12.04% 11.09% 7.70% 7.28% 2.03% 2.12% 0.99% 0.86% 0.61% 0.60% 0.22% 0.21% Source: USDA Risk Management Agency, October 2011

  5. Same Crop Insurance Premium Subsidies Source: USDA Risk Management Agency, October 2009

  6. New in Crop Insurance for 2012 • Trend-Adjusted APH Yield Endorsement • Lower premiums rates: Iowa roughly 13% lower for corn and 9% for soybeans • New county transitional yields (T-Yields) • Discontinuation of the Biotech Yield Endorsement (BYE) • Dates changed: • new acres insured from sod busting/CRP (Mar. 15) • acreage report deadline (July 15) • crop insurance billing date (Aug. 15). Source: USDA Risk Management Agency, November 2011

  7. 2012 Crop Insurance Decisions Unit Coverage? (Basic, Optional or Enterprise) Deductible? Additional Hail, Wind or Greensnap Policy? Revenue Protection – RP (65%-85% Levels) Trend-Adjusted APH Yield Endorsement ? Source: Johnson, ISU Extension, February 2012

  8. County APH Crop Yield Trend Adjustment Source: National Crop Insurance Services, Nov. 2011

  9. Trend-Adjusted APH Yield Endorsement Example of a Typical County Corn Trend Adjustment Factor = 2.5 1999: 13 years X 2.5 = 32.5 bu/A 2011: 1 year X 2.5 = 2.5 bu/A Actual Yield = 174.7bu/A or TA Yield Option = 194.5bu/A Source: Iowa Crop Insurance Industry, February 2012

  10. Iowa Corn Actual vs. Trend-Adjusted Yields Source: Hart, ISU Ext. Econ & USDA NASS, February 2012

  11. Iowa Soybean Actual vs. Trend-Adjusted Yields Source: Hart, ISU Ext. Econ & USDA NASS, February 2012

  12. Sales Closing Date: March 15th – Product, Level of Coverage, Unit Structure and Trend-Adjusted Yield Endorsement Production Reporting (Previous Year): April 29th Initial Planting Dates: April 11th Corn and April 21st Soybeans Final Planting Dates: May 31st for Corn and June 15th for Soybeans Acreage Reporting Deadline: July 15th Premium Penalty Assessed: Beginning October 1st End of Crop Insurance Period: Earlier of when the Crop is Harvested or December 10th. Important Iowa Crop Insurance Dates Source: Johnson, ISU Extension, February 2012

  13. Leveraging Revenue Protection (RP) Source: Johnson, ISU Extension, February 2012

  14. Pre-Harvest Marketing Strategies • Revenue Protection = Insurance Bushels that can be committed to Delivery • Insurance Bushels = APH X Level of Coverage X Higher of Projected vs. Harvest Price • Combine Insurance Bushels sold for Delivery along with the use of Futures and Options Strategies for Non-Delivery bushels. Source: Johnson, ISU Extension, February 2012

  15. December ‘12 Corn Futures Chart Source: www.jimwyckoff.com, Jan. 16th, 2012

  16. Delivery of Corn Bushels with Revenue Protection (RP) Example • Marketing Strategy • Pre-Harvest Sell for Delivery up to 140 Bu/A • Price Guarantee is Higher of the Projected Price vs. Harvest Price • Slight Basis Risk • Must Plant the Crop Deductible 20% = 35 Bu/A RP @ 80% Level of Coverage 140 Bu/A Guarantee X $5.80/bu Projected Price 175 Bu/A Actual Production History (APH) = $812/A Revenue Guarantee Source: Johnson, ISU Extension, February 2012

  17. December Corn Futures Seasonals (1990-2011) Source: Usset, CFFM, U of MN, October 2011

  18. Corn: Projected vs. Harvest Price Source: USDA Risk Management Agency, November 2011

  19. 2012 U.S. Planted Acreage Forecast 94 M 77 M 57 M 30 M * Forecast Source: USDA NASS & Johnson, ISU Extension, December 2011

  20. La Niña Affect on U.S. Weather • What the “double-dip” La Niña means for 2012… • Fewer weather extremes compared to 2010 & 2011. • Dry 2011 fall matches analog years of 1971, 1974, 1999 and 2008, but duration is similar to 1988-89. • Expect this La Niña to last into March 2012. • Odds are 60% shift to El Niño by summer months. Source: Wolter, NOAA, January 2012

  21. Elwynn Taylor’s 2012 Risk Wheel La Niña Summer = 70% risk of below trend line corn yield Neutral Summer = 53% risk of above trend line corn yield El Niño Summer = 70% risk of above trend line corn yield Source: Taylor, ISU Extension Climatologist, January 2012

  22. 2012 U.S. Corn Acreage & Yield Matrix * Estimates in Billion Bushels U.S. Corn Demand for 2012-13 = 13.2 Billion Bushels Source: USDA WASDE & ISU Economics, January 2012

  23. November ‘12 Soybean Futures Chart Source: www.jimwyckoff.com, Jan. 16th, 2012

  24. November Soybean Futures Seasonal (1990-2011) Source: Usset, CFFM, U of MN, October 2011

  25. Soybeans: Projected vs. Harvest Price Source: USDA Risk Management Agency, November 2011

  26. Pre-Harvest Marketing Thoughts • Revenue Protection preferred for sale of Crop Insurance Bushels = Delivery Bushels(Guaranteed Higher of Projected vs. Harvest Price) • New Barometer on March 1st: the Projected Price (February average) for Delivery Bushels • Generate adequate Cash Flow Needs for Fall 2012 through Winter of 2012-13 • Use of Futures and Options Strategies for Non-Delivery Bushels. Source: Johnson, ISU Extension, February 2012

  27. 5 Crop Insurance Strategies Prove your APH yields annually by Farm Level (Optional Units) Consider Pre-Harvest Marketing Bushels using Revenue Protection Lower 2012 Premiums but Higher Revenue Risk Understand Unit Coverage & New Trend-Adjusted Yield Endorsement Use Revenue Protection (RP) Products (Consider Additional Hail/Wind Coverage) Source: Johnson, ISUE Farm Mgt., Sept. 2008. Source: Johnson, ISU Extension, February 2012

  28. 5 Crop Insurance Web Sites Ag Decision Maker – ISU Extension Econ (Decision Tools, Newsletters, Publications, Voiced Media, Monthly e-Newsletter) www.extension.iastate.edu/agdm USDA Risk Management Agency (RMA) www.rma.usda.gov Farm Doc – U. of Illinois Extension Econ www.farmdoc.illinois.edu Ag Manager – K-State Extension Econ www.agmanager.info Crop Risk Management - ISU Polk County (Crop Marketing Newsletter & Crop Insurance Updates, Webcasts) www.extension.iastate.edu/polk/farmmanagement Source: Johnson, ISU Extension, February 2012

More Related