Commodity markets have not been kind to agricultural producers and landowners so far in 2025. When the Spring Crop Insurance Projected Prices (PPs) were established in February, corn stood at $4.70/bu. and soybeans were at $10.54/bu. Current Chicago Board of Trade futures prices show new crop Dec Corn Futures in the $4.40 area, while the Nov Soybean contract is hovering around $10.30. Recent price lows for those same contracts were posted at $4.35 and $9.70 respectively.

While declines of those magnitudes would not be categorized as a wholesale collapse, they do continue to add weight to producer margins at the farm level, which are now in the red for many. Part of what has made this year unusual - and challenging from a per acre P&L perspective on the farm - is the fact that growers/landowners have not had an opportunity to hedge/forward price/market grain at values above those established Spring Projected Prices so far this growing season.

The chart below plots the growing season price highs (May 1 - Aug 31) in new crop corn and soybean futures as a percentage of the crop insurance Projected Prices for each year. Of note in the chart is that for both crops, there has been only one year in which the new crop futures did not trade at or above the crop insurance base price.

When evaluating the odds of the market exceeding the Spring Insurance Guarantee Prices going forward, the chart below plots the seasonal nature of prices for the CBT Dec Corn Futures contract, showing the 5-, 10- and 15-year seasonal price trends against the price action of the current Dec 2025 futures so far this year. Note that as of mid-June, we are pushing past the best seasonal window for a seasonal price rally, with the pattern quickly turning bearish into the last half of the month. If prices this year follow the long-term pattern, seasonal price lows in corn would not be established until just prior to harvest, meaning producer margins could go from bad to worse.

The data offer a very complicated outlook. On one hand, it would be exceptionally rare for December Corn Futures not to trade above the Spring Crop Insurance Projected Price during the growing season. On the other hand, summer price rallies beyond late June are also rare without a major US weather problem.

Predicting weather is always a risky game, but current meteorological guidance shows that the probability of US Midwest heat/dryness/drought developing in the next 30-60 days is declining, currently standing at 20% or less. Coupled with the ‘Trump Trade War’/tariff woes, building the case for a sharp rebound in commodity prices (and revenue above break-even values on 2025 grain production) becomes difficult at best.

WHAT DOES THIS MEAN FOR YOUR CROP INSURANCE POLICY?
This year’s countercyclical decline in commodity prices makes the Revenue Guarantee of your Crop Insurance Policy more important than ever!

Your policy’s minimum Revenue Guarantee is specific to your farm operation, and how combinations of yields and prices compare to the minimum revenue guarantee established when your policy was set up in the Spring. While that revenue guarantee can go up if fall insurance Harvest Prices (HPs) are above the spring projected price, it can NEVER go down. If grain/soy prices are lower in the fall vs. those in established in the spring, and your revenue to count falls below the initial guarantee, the policy will reimburse you for the difference.

While the examples above have focused on prices to this point as it relates to the Crop Insurance Revenue/Guarantees, it is important to recognize that the policy also insures ‘bushels’ or the yield side of the revenue equation. Taken together, when the underlying price of a crop is falling, your effective Yield Guarantee is actually increasing as a result. The table below illustrates that relationship, and shows that for a Revenue Protection policy on corn, with a Spring Projected Price of $4.70 and yield guarantee of 200 bushels per acre, a decline in price this fall to say $4.00, would raise the policies Yield Trigger/Guarantee to 235-bpa. Obviously for many farms in the corn belt, prices and yields tend to be negatively correlated such that large crop years increase prices, and short crop years help to increase prices.

While the Revenue Guarantee of the Crop Insurance Policy may or may not ensure that your operation is profitable for the 2025 season, it does go a long way towards protecting your margins in years when commodity prices are low/falling. A situation that we appear to be headed towards this year.

STRUCTURING POLICY COVERAGE IS IMPORTANT, BUT IT CAN ALSO BE COMPLICATED
Investors and land operators often mistake the crop insurance function as ‘just another expense’, starting from the viewpoint of keeping the premium cost as low as possible. For some operations, low cost ‘disaster insurance’ type coverage may be the best choice. In most cases, however, the customizable aspects of a crop insurance policy, specially tailored to your farm’s individual, financial and operational needs – built on the back of Federally subsidized underlying crop insurance products -- provides not only an appropriate ‘bang for the buck’ in terms of coverage and managing against production or revenue risk, but gives operations a ‘leg up’ or competitive advantage in terms of financial performance among its rivals.

PREMIUM SPEND...
Those advantages may come in the form of an insurance agent who has access to more than just one or two different insurance providers and can evaluate the cost of similar coverages among a pool of providers. While the costs of Federal MPCI coverage is standardized due the government subsidy, each AIP (Approved Insurance Provider) sets their own individual rates on what are referred to as ‘private products’, such as hail, wind and replant coverage. Those rates can vary by several dollars per acre for the same geographic area among the various AIP’s. Said differently, do you want to pay more than your neighbor/competitor for the same coverage, and are you confident you agent/advisor can see all rates available in your region and has access to all of the insurance providers?

POLICY STRUCTURE...
A qualified insurance professional should also be able to help you assess your farm’s risks related to financial outcomes under various market scenarios. In years when tight margins are expected, the use of products that allow you to increase, or ‘buy up’ the Revenue Guarantee associated with your Crop Insurance policy can be especially important. Products including ECO or ECO plus allow producers to go above the typical crop insurance maximum coverage level of 85%, to 90% or even 95%. Having a higher Revenue Guarantee inside your policy in a low margin year can often be the key to getting you ‘over the hump’ in terms of having a profitable vs. unprofitable year.

An experienced agent can help you explore ways to set-up your overall coverage to help offset the cost of moving your coverage levels/guarantees to higher levels. Most insurers offer private add-on’ or ‘over the top’ coverage products to complement your base policy. Each is structured and priced differently. While these products may or may-not be appropriate for your situation, make sure you are working with an advisor who understands and has access to all the various products introduced each year.

PULLING IT ALL TOGETGHER...
It appears that 2025 may be a challenging year for many operations due to low corn and soybean prices. Some producers with sub-par crop insurance coverage are likely to be left in a situation where yields are near average, but commodity prices are low with resulting revenues that may fall below production costs. In either case, it is critical to look forward to make sure you enter the coming season with the right partner in your corner and maximize the chance for profitability including your crop insurance decisions.

Our platform is designed to help you make sure you are taking a holistic approach to Crop Insurance with an understanding of how it fits into the overall financial risk management of the farm operation. Included in the overall evaluation is a deep consideration of the following:

1. Commodity Markets: Our experienced and analytical understanding of the commodity markets helps tailor both the product selection and your marketing plans to complement and integrate with each activity.

2. Crop Revenue Insurance portfolio: A deep understanding of, and access to products from an industry-wide group of providers allowing for lowest cost/highest benefit premium spend.

3. Government Programs and related safety nets: A complete set of options including the interplay with other government and ad hoc aid/disaster programs alongside the crop insurance safety net.