U.S. crop-insurance rates for corn, soybeans and wheat are being set higher than this year’s projected cash prices, encouraging more planting a year after a drought led to record damage payout to farmers.
Farmers in most growing regions will be guaranteed a price of $5.65 a bushel for corn, the country’s biggest crop, according to the Department of Agriculture. Soybeans will have a floor of $12.87 a bushel and spring wheat will be priced at $8.44 a bushel, the department said in a March 1 release.
The USDA, at its annual outlook forum last month, said cash prices for corn will average $4.80 in the year starting Sept. 1, soybeans will average $7.90, and all varieties of wheat $7. The projected prices are all down from the previous year as the government is forecasting a surge in production.
Lower prices after last year’s drought, the worst since the 1930s, reflect a classic supply response to shortages, Joe Glauber, the USDA’s chief economist, said on Feb. 21. As of Feb. 18, farmers had collected a record $14.7 billion in insurance payments for last year’s crops.
Farmer profit will still reach a record $128.2 billion this year as supplies are replenished, the USDA said in February.