Now that the crop insurance rates have been set, farmers know they have a floor to work with in the grain markets. But it doesn’t mean all risk has disappeared.
The corn rate appears to be $4.58 for 2021. That is lower than the record of $6.01 in 2011, but it is higher than in recent years and is above the cost of production for most farmers, according to Don Roose, president of U.S. Commodities in West Des Moines. The soybean rate is set at $11.87, lower than the record of $13.49 in 2011 but still high and well above the cost of production.
Those rates could provide incentive for farmers to plant more corn and beans this year, Roose says.
Farmers are also looking at corn and soybean prices right now that are high but locked into a trading range. There is little happening at present to push those prices dramatically higher, but little to push them dramatically lower either, Roose says.
Since most farmers have sold most of their 2020 corn and bean crops, much of the farmer attention has turned toward marketing 2021 or 2022 grains.
But there are still things to be watching in the short term. South American weather is still a market factor.
Parts of Brazil and Argentina are too dry and face an arid 10-day forecast. Parts of Argentina are also too wet. That isn’t completely unusual, Roose says, reminding farmers that both countries are large and long. The distance from the Amazon to southern Argentina is similar to the distance between southern Canada to northern Mexico.
With all those things in mind, Roose says much can happen, but the market appears most likely to stay in a trading range for at least a little while as it watches all these potential market developments. And farmers are at least looking at marketing decisions from a profitable perch at the moment.