The Risk Management Agency (RMA) recently released rates that can be used to calculate 2014 insurance premiums for corn and soybeans. For corn, insurance premiums likely will be slightly lower than in 2013. Guarantees will be much lower in 2014 as compared to 2013. For most cash rent farmland, guarantee levels from crop insurance will not cover total costs in 2014.

2014 premiums

Revenue Protection (RP) insurance premiums are estimated for corn in Sangamon County, Illinois, using a 100-acre enterprise unit and a 187-bushel per acre Trend Adjusted Actual Production History yield. Insurance premiums for 2014 will be influenced by the projected price and volatility, which will be known at the end of February. Premiums for 2014 are estimated using a $4.60 projected price and a .22 volatility. The $4.60 projected price is based on currently levels of the December 2014 Chicago Mercantile Exchange corn future contract, the contract that will be used to set the 2014 projected price. The $4.60 price is $1.05 lower than the 2013 projected price of $5.65. The .22 volatility is higher than the .20 volatility for 2013. Premiums will be higher if either the projected price or volatility is higher than those used to estimate premium. The converse is true as well: premiums will be lower for a lower projected price and a lower volatility.

At an 85% coverage level, the 2013 premium is $25.63 per acre (see Table 1). The 2014 premium is $1.22 lower at $24.41 per acre. At 75% and higher coverage levels, 2014 premiums are projected to be between 2 and 5 percent lower in 2014 as compared to 2013.

revenue protection premium and guarantee levels