By Julie Ingwersen and Mark Weinraub
CHICAGO, March 1 (Reuters) - Crop insurance policies that guarantee prices for the 2021 growing season are the highest in seven years for corn and the highest in eight years for soybeans, bolstering expectations for record combined acreage of both crops, analysts said.
The U.S. Department of Agriculture (USDA) sets the guarantees, which act as the floor price below which farmers with insurance receive payments, at $4.58 per bushel for corn and $11.87 a bushel for soybeans across most of the U.S. crop belt.
The prices reflect the average settlement for Chicago Board of Trade December corn futures and November soybean futures during the month of February. Prices have jumped from a year ago due to robust export demand that is expected to tighten year-end supplies of the two most widely planted U.S. crops.
The guarantee price for corn is up about 18% from $3.88 in 2020, while the soybean price surged 29% from $9.17 last year.
"These guys will plant fencepost to fencepost and ditch to ditch to take advantage of these insurance prices," said Mark Gold, founder of Top Third Ag Marketing in Chicago.
CBOT November soybean futures, which track the crop that will be harvested in the fall, jumped 7.0% during February, topping the corn market's 5.7% rally. Analysts said the market was trying to entice farmers to boost their soy seedings more than corn.
The price ratio between February soybean prices and corn prices, which the insurance guarantees are based on, stood at 2.59, the highest since 1989.
"There is a little bit of an incentive to plant more soybeans, but that is not going to be the deciding factor," Gold said. "If they have the weather, they will get the corn in."
The USDA last month projected 2021 U.S. corn plantings at 92.0 million acres, up from 90.8 million in 2020, and soybean plantings at 90 million acres, up from 83.1 million in 2020.
Planting season in the core Midwest crop belt is about a month away. The deadline to buy a crop insurance policy is March 15. (Reporting by Mark Weinraub and Julie Ingwersen; editing by Jonathan Oatis)
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