Snow Day! Time to Look at Crop Insurance Options

Between the Fencerows

Snowy weather demands staying inside, so I suppose it's time to get moving on paperwork.

Published on: January 7, 2014

As I type, we should be en route to the Farm Futures Business Summit in St. Louis. We probably could have made it to the highway, which I can see from our kitchen window. However, the county is in a "state of emergency" and I only saw two trucks on U.S. 30 this morning. With a daytime high temp of -12 degrees, we decided to stay home. There is no way we could have made it to the in-laws to drop off the kids, either.

This is the first real winter storm we have had in quite a while. I can remember a couple times as a kid we were kept home due to ice and snow, but nothing in recent history.  Honestly, I don't mind it. The pile of paperwork is getting whittled down. I was able to catch up on video clips and basketball quizzes for officiating. I'm also hopeful this will provide a spark to get some local corn basis levels moving up. I know there hasn't been much corn moving this month. I would like to move some, but it appears we are locked in a staring contest, whoever blinks first may lose.

I've taken time to look at some crop insurance riders, too, specifically the ones that offer alternative months for the price discovery period. I've been looking at the prospect of using January pricing, mostly out of fear the market will continue to grind lower through February, the normal pricing period. I've also looked at the option to add June, July, or both, as well. The thought there revolves around the possibility of a weather market.

In a year when every penny will count, I don't want to be throwing money away, so I decided to do some research. I took a look at historical data from the University of Illinois. It showed in the last ten years, January corn price was higher than February corn price only two times, while June and July were higher eight and six times respectively. In soybeans, June showed an even more dominating price over February.

Please note, this research is not perfect, as the tables available are showing nearby futures, not the deferred (new crop) that crop insurance uses to establish prices. However, it does give an indication of annual trends.

If you're considering a policy like this, it is time to check with your agent. December deadlines have already passed, and January cut-off will soon be upon us.

Stay warm out there!