Disclaimer:
This web page is designed to aid farmers with their marketing and risk
management decisions. The risk of loss in trading futures, options,
forward contracts, and hedge-to-arrive can be substantial and no warranty
is given or implied by the author or any other party. Each farmer must
consider whether such marketing strategies are appropriate for his or her
situation. This web page does not represent the views of Kansas State
University.
Estimated revenue insurance Harvest Price for Wheat2,
for States with Sales Closing 9/30
Daily
Daily
Daily
Daily
Closing
Closing
Closing
Closing
Price
Price
Price
Price
KCBOT
CBOT
KCBOT
CBOT
July 05
July 05
July 05
July 05
Date
Wheat
Wheat
Date
Wheat
Wheat
06/01/05
3.3425
3.3150
06/16/05
3.2625
3.2350
06/02/05
3.2750
3.2350
06/17/05
3.3175
3.2750
06/03/05
3.2700
3.2325
06/20/05
3.4275
3.3900
06/06/05
3.2600
3.2250
06/21/05
3.3825
3.3500
06/07/05
3.2075
3.1925
06/22/05
3.3775
3.3600
06/08/05
3.1550
3.1325
06/23/05
3.3500
3.3175
06/09/05
3.1650
3.1425
06/24/25
3.3900
3.3950
06/10/05
3.1700
3.1350
06/27/25
3.3200
3.3100
06/13/05
3.1950
3.1375
06/28/25
3.2975
3.2775
06/14/05
3.2125
3.1600
06/29/25
3.3300
3.2850
06/15/05
3.2650
3.2300
06/30/25
3.2800
3.2150
Avg Harvest
KC Wheat
Chicago Wheat
Price
$3.284
$3.254
Plant Price
$3.56
$3.40
Price Change
($0.28)
($0.15)
% change
(-7.75%)
(-4.29%)
Increase in Trigger Yield1
108.4%
104.5%
1
In years when prices fall, it requires a smaller yield loss to trigger
revenue insurance claims. For example the trigger yield for a Wheat
grower with a 50 bushel APH times 70% coverage is 35 bushels based on
the planting price of $3.56. Based on today's lower harvest price this
same Wheat grower will have a claim if yields are below 37.9 bushels or
108.4% of the minimum trigger yield of 35 bushels. Wheat growers may
calculate their trigger yield by multiplying 108.4% times their APH
times the percent insurance coverage they selected. Any yield below
this level will trigger revenue insurance claims. This does not apply
to MPCI-APH.
2
RA uses the July 1-14 closing July wheat prices to settle claims.
An Example Kansas Wheat Claim. A Kansas Wheat grower with a 50 bushels
APH X 70% coverage X higher of harvest, plant price of $3.56 would have
had a revenue guarantee of $124.60. If this grower produced 15 bushels,
then based on today's price of $3.28 the revenue to count would be
$49.20 and the indemnity payment would be the difference between the
revenue to count and the revenue guarantee for gross indemnity payment
of $75.40 (before premium deduction).
