Harvest Risk Management Newsletter
We may have a repeat of 2008. With the wet spring and the possibility of lower harvest prices, we once again expect harvest losses this year. Spring prices were set at $4.04 for corn and $8.80 for soybeans. The harvest price will be set during the month of October for all soybean revenue policies (CRC, RA, and GRIP) and two of the corn revenue policies (CRC and GRIP). The corn harvest price for RA is set during the month of November. If the harvest price comes in lower that the spring price, your final revenue guarantee will be based on the spring prices. If the harvest price comes in higher than the spring price, your final revenue guarantee will be increased accordingly.
As we approach the 2009 harvest season it is important to remember the following:
1. Contact your Harvest Risk Management agent before chopping any of your corn acres. You may or may not need to have an adjuster assess your yield depending on what kind of policy you have, how much of a unit you intend to chop, and whether you think the unit in question will have a loss.
2. Contact your Harvest Risk Management agent if you have any old crop grain still in storage. This grain must be accounted for before comingling it with grain from the 2009 harvest. If this is not done, the old crop bushels will count against any potential 2009 loss.
3. If you think you have a loss and you will have settlement sheets, the adjuster will want to see some sort of field identifier next to the loads on the settlement sheets. The good option would be for your elevator to print the farm name (as it appears on your insurance policy) or the FSA farm serial number on the settlement sheet. Printing the FSA farm number could also assist in documenting information for the ACRE program.
4. Remember that in a claim situation, the adjuster needs a way to split out co-mingled production (several optional units in the same bin).
· One way to split it out is to mark the bin.
· Another way is to keep load logs (i.e. the 10,000 bushel bin has 2 loads from unit 101, 5 loads from unit 102, and 8 loads from unit 103).
· Another way is to use combine yield monitors to split out the bin (i.e. the combine monitor shows that unit 101 had 1510 bushels, unit 102 had 3567 bushels, and unit 103 had 5103 bushels and they all fit in the 10,000 bushel bin).
The adjuster will measure the bin and then use the load log, combine monitor, or on-farm scale reports to split out the co-mingled production into the optional units.
Wheat Insurance and the SURE program
If you are planning to plant wheat this fall or think you might plant wheat, please give your Harvest Risk Management agent a call. We will remind you that the SURE program will still be in place for 2010 and you must buy crop insurance on all crops that you grow. So if you plant wheat this fall and do not purchase crop insurance, you will not be eligible for any disaster payment for any crop under the SURE program in 2010. Sales closing date for wheat is September 30, 2009.
In addition, if you want access to the SURE program in 2010 and you plan to have acres certified as forage or grazing, you will need to sign up for NAP for 2010 before the FSA’s deadline. Check with your FSA office for the deadlines on those items.
2008 SURE program
This fall, you may here about possible disaster payments generated from the 2008 SURE program. Many of the counties that Harvest Risk Management serves are eligible for SURE payments because of being designated disaster areas last year. If you would like, your Harvest Risk Management agent will be able to help you determine if you should inquire about a SURE payment at your local FSA office.
We have mentioned that Illinois producers were able to select AGR (Adjusted Gross Revenue) Lite to cover their crop insurance needs this year. Very few of these policies were sold for 2009, but we think AGR Lite might be an option to look at for 2010.
This coverage is based on 5 consecutive years of Schedule F income (from your tax returns). There are procedures to take into account operations which are growing or shrinking. It was developed to give producers with several farm enterprises (especially livestock and farm markets) another way to manage risk.
We think it might be worth looking at for 2010 because the policy will be based on trend adjusted gross farm income from 2004-2008 and 2008 was a pretty good year for most farmers.
The “Lite” designation means that liability for this product will be limited to $1,000,000 per producer.
New AGR-Lite policies must be signed by March 15, but you may want to speak with your Harvest Risk Management agent about it before signing up for wheat coverage on September 30.
Farmgate: USDA's August 1 Crop Report
The most anticipated crop report of the production year was released by USDA’s National Agricultural Statistics Service, which forecast the second largest corn crop and fourth soybean crop on record. But USDA also said the Cornbelt was not going to produce as much as would be expected.
USDA’s first objective yield estimate, in which statisticians took field surveys, found 5% more corn than last year and 8% more soybeans compared to 2008. But USDA also said corn “Yield prospects are lower in the central Corn Belt where excessive spring moisture delayed planting and below normal temperatures slowed corn emergence and development.” Regarding soybeans, USDA said, “With the exception of Illinois, yields are forecast higher or unchanged from last year across the Corn Belt and Great Plains.” And UDSA also said ear counts were unusually high in most states, “The August 1 corn objective yield data indicate a record high number of ears per acre for the combined 10 objective yield States (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin). Record high ear counts are forecast in all objective yield States except Illinois, Missouri, and Wisconsin.”
USDA also expressed its concern about the delay of the corn crop, particularly in Illinois, “Double-digit silking progress was evident mid-month throughout much of the Corn Belt; however, large phenological delays remained in Illinois and Indiana. In Illinois, the second largest corn-producing State, silking was 2 weeks
behind the normal pace on August 2. Seven percent of this year’s corn crop was at or beyond the dough stage on July 26 and had reached 14 percent complete by August 2, slightly behind last year and 15 points behind the 5-year average. Doughing had yet to begin in Minnesota and North Dakota, leaving progress over 1 week behind normal in both States. Overall, the condition of the corn crop declined 3 points during July, with 68 percent rated good to excellent on August 2.”
Based on the corn yield and production estimates of 12.761 billion bushels, USDA revised its consumption forecasts. With the upward bump of 471 million bushels of corn from the July estimate, USDA pushed feed demand up 100 million bushels to 5.300 billion, pushed up ethanol demand by 100 million bushels to 4.200 billion, and pushed up exports 150 million to 2.150 billion bushels. The carryout was raised from 1.550 billion in July to 1.621 billion at the end of August 2010. USDA revised the national average price range down by 25¢, and reset the range to be $$3.10 to $3.90 per bushel.
Compared to the USDA report, a survey of commodity traders indicated they had been expecting a 12.554 billion bushel corn crop (in a range of 12.3 to 12.8 billion), with a national average yield of 157.1 bushels per acre. The market had also expected the new crop corn carryout to be 1.697 billion bushels.
Crop Progress Report
Crop Progress Report
USDA released a new Crop Progress report on Monday, August 31. The corn conditions rating was 69% good to excellent compared to 70% the previous week. Crop progress remains below normal with only 75% of the crop in the dough stage versus the five-year average of 88% and 32% of the corn crop dented is compared to the five year average of 60%. Soybean condition ratings were also unchanged from the week prior at 69% good to excellent. The soybean crop is also running below normal maturity as only 93% of the crop is setting pods compared to the five-year average of 96%.