For producers with an actual production history for corn close to what they expect to grow, payments begin to kick in at $3.53, explains Dustin Johnson, EHedger.
“I think that corn has fallen so far below that spring crop insurance price, you’ve got to look at the potential that revenue payments actually start kicking in for those producers that are holding premium crop insurance policies: the 85% RP, 90% ARP,” Johnson tells Clinton Griffiths on the “AgDay” Agribusiness Update segment.
Their risk really starts to flatline as they get closer to $3.50.
“I think the risk is really dropping for a lot of producers below that level, and aside from the old-crop overhang, I think you’re going to find very reluctant sellers down here because of that risk being flatlined,” Johnson continues.
Soybeans are a different story.
“[The corn-soybean ratio is] 2.45 to 2.5 … which I think is very high for the situation that we’re in,” he explains. “We’re going to be building soybean stocks much faster than we’re building corn stocks. I think with the world supply of soybeans out there, I think that if we get into the summer with normal weather that would be the biggest surprise, the soybeans could outpace corn to the downside.”