March 14 deadline for spring wheat insurance

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BROOKINGS — Spring wheat can be insured in all counties in South Dakota. In 2012, there were 2.2 million acres of wheat insured in South Dakota across classes at a cost to growers and landowners of $32 million.

The most common type of insurance was revenue protection, explains Matthew Diersen, SDSU Extension risk/business management specialist.

“Revenue protection covers against yield and price risk. The most common level of yield coverage was 70 percent — slightly below that of corn and soybeans,” Diersen said.

Because the deadline to make any changes is March 15, Diersen said early March is the critical time to evaluate insurance coverage. February is the price discovery month for spring wheat coverage.

The highest projected price was $11.11 per bushel in 2008. The cost of insurance increases with the projected price level and the volatility factor. The five-year average volatility factor is 0.25. The insurance settles after the harvest price discovery period. The average during August of the same MGE contract is used to determine the harvest price. The record harvest price was in 2012 at $9.30 per bushel.

The earliest planting dates are March 16 for southern counties and March 26 for northern counties. The final planting dates (for full coverage) are May 5 and May 15 for the same counties.

Growers and landowners that market the crop prior to harvest should be conscious of the August insurance settlement time. Basis, measured as the difference between the cash price received by farmers and the harvest price, has a five-year average of $-0.75 per bushel for spring wheat going into 2013.

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