Last week, USDA updated the season average weighted prices for corn, soybeans, wheat and cotton in its monthly supply and demand drop. These figures are oftentimes overlooked when analysts probe through the data, though it’s a crucial piece in ARC and PLC calculations.
These programs are likely to prove beneficial for many operations given the current economic landscape as changes to the effective reference price in President Trump’s One Big Beautiful Bill make the program more favorable to producers compared to recent years. While known to stir confusion, USDA’s 10¢ per bushel increase to its weighted-average corn price ($4.10) may have compounded those sentiments as the government simultaneously confirmed the country’s largest ever corn crop. However, the increase was a result of active farmer selling in the first quarter of the marketing year above $4.10.
The bump came as the soybean price was lowered by 30¢ to $10.20 and wheat 10¢ to $4.90. The cotton price rose one cent to 61.00¢.
This is important as increased prices could result in lower ARC/ PLC payments to producers for the 2025-26 crop, though the marketing year average will be most crucial.
In looking forward to the 2026-27 crop, we would take caution in considering a potential ARC/PLC payout in conjunction with grain marketing efforts. Potential payments and the price discovery period are well over a year out – and the program isn’t designed to make an operation whole in the event of loss, as payments are capped per entity.
The same can be said for the Federal Crop Insurance program. The discovery period for the projected price for corn and soybeans, averaged in February, is just around the corner and quickly followed by the March 15 deadline to signup.
While there’s no question the program provides a safety net for producers, it’s triggered when a disaster occurs. If yields and/or prices are high enough, there is no claim. The likelihood of having another crop this year is high and the only way to leverage a federal crop insurance policy is to forward market. Make sure to have targets and stay disciplined as the year progresses - paying crop insurance premiums and selling low-priced crops isn’t an ideal scenario.
It’s anyone’s guess as to how the next growing season adds up, but there is certainty in vigilant marketing efforts. We favor establishing floors with upside potential.
Stay tuned as we continue to monitor futures into the new planting and growing season.