With new-crop corn and soybean futures markets priced for profit, farmer Rod Pierce takes full advantage of revenue crop insurance. He makes substantial grain sales in addition to guaranteeing income on 75-85% of his production.

Pierce, who raises corn and soybeans near Woodward, Iowa, doesn’t see much risk in taking a profit when it’s on the table – especially when insurance covers yields and a strong price. Neither should other growers who can capitalize on solid grain prices following the 2012 drought, says Steve Johnson, Iowa State University Extension farm management specialist.

March 15 is the deadline for Revenue Protection insurance signup. Corn and soybean payment prices are based on the November 2013 soybean futures price and the December 2013 corn futures price. In mid-January, December corn was in the $5.80-6/bu. range, with November beans in the $12.70-13/bu. range. Both are above typical Corn Belt breakeven levels, says Johnson.

Pierce takes Johnson’s advice that farmers shouldn’t be afraid to sell up to their revenue protection insurance guarantee preharvest if grain prices can deliver a profit. “This advice paid big dividends for me last August,” Pierce says. “It’s hard to sell when you’re not sure of the bushels you’ll produce. It’s easier knowing that federal crop insurance will cover your sales if needed.”

Pierce plants his acres to 90% corn and 10% soybeans. He has 250,000 bu. in on-farm-storage capacity, which facilitates periodic sales using hedge-to-arrive (HTA) contracts and futures. He markets most corn to a regional Louis Dreyfus ethanol plant. He also grows and markets Pioneer Hi-Bred seed.

Using revenue protection (RP) insurance, he takes advantage of strong prices, even if production is questioned in the middle of a drought. “I analyze the different RP options once the spring price is set, then pick the one I feel gives the best value,” Pierce says. “With the extreme dry subsoil this winter, I will most likely use the 85% coverage level with the trend-adjusted provision. It was a great deal for our operation in 2012. It helped bring our average APH to 198 bu./acre.”

With the 198/bu., his RP coverage will likely provide a price floor in the $5.80-6 range for 85% of his projected yield. “That’s a great place to start marketing from,” he says.