As corn and soybean prices continue to plummet under the pressure of high yields and an escalating trade war, farmers can expect little help from crop insurance or from the government safety net. According to Purdue Economist Dr. Chris Hurt, some corn growers will be helped by crop insurance but only if they have very high levels of coverage. “It looks like at 90% coverage on corn with average yields crop insurance would begin to protect below $3.60 December futures, he stated. “But that would only be for those who had extremely high levels of coverage.”
As for soybeans which have seen prices fall over $1.50 a bushel in the past few weeks, Hurt says, “At $10.16 futures with 85% coverage, protection would start at $8.65 with normal yields.” On Tuesday, November Soybeans closed at $8.71.
If you were counting on the county ARC program for help, Purdue economist Michael Langemeier says, in the Eastern Corn Belt, that help may not be there. “I did some number crunching on the county ARC program and the prices for soybeans have to be really low for ARC coverage to kick in here in the Eastern Corn Belt,” he said. “Soybean prices would have to drop below $8.40.”
The Trump administration has said it has the farmer’s back, but no relief plans are set to be announced until Labor Day. Dr. Hurt estimates it could cost over $15 billion to make up losses suffered by corn, soybean, and wheat growers.
Corn and soybean growers are not the only ones feeling the pinch. Large pork supplies, rising costs, and potential trade retaliation from both Mexico and China continue to cast a shadow over the pork industry. Losses are expected for the rest of 2018 and 2019. Those losses will be small this summer, but then the bottom falls out. Losses of more than $25 per head are estimated for the last quarter of 2018 and the first quarter of 2019, estimates Hurt. “There is a lot of pork. Production so far this year is up nearly four percent with the number of head coming to market about three percent higher and weights up near one percent,” he stated. “Domestic demand and export demand have been good this year but not strong enough to offset the higher supplies. As a result, live hog prices have been down three percent.”
Trade concerns continue, but exports have remained favorable. The data that is available so far this year, shows pork exports growing by almost six percent. This is on-track with current USDA estimates for pork exports to grow by five percent for the entire year.
Hurt estimates that “Losses for average costs farrow-to-finish operations are estimated to be $8 per head in the second quarter of 2018 and $3 per head of loss in the third quarter. Then losses explode to an estimated $29 per head in the last quarter of 2018 and $24 per head of loss in the first quarter of 2019. On an annual basis, estimated profits were $4 per head above all costs in 2017, are estimated at a loss of $11 a head in 2018, and an even greater loss of $14 per head in 2019.”