Crop Insurance Today Second Quarter 2021 - 21

modity prices have
rebounded considerably
Figure 11
from the 2020 crop year. With the exception of
rice, all commodities experienced double digit
percentage increases for 2021. Most notable is
the roughly 30 percent increase in the 2020 soybean
base price of $9.17 per bushel compared to
$11.87 per bushel for 2021.
Implied volatility factors (IV) derived from
futures market information serve as the measure
of risk for expected prices. RMA annually
calculates the implied volatility factor for an
insured commodity by averaging the implied
volatility of near in-the-money options for a selected
futures contract over the final five trading
days of the discovery period for that crop. For
example, implied volatilities over the final five
trading days in February on the futures contract
for December delivery are used to determine
the IV factor in the major corn producing states.
RMA uses the IV factor to simulate the expected
price distribution for the crop, which is then
utilized to establish the price risk component of
the premium rate for the specific crop revenue
plan of insurance. A high IV indicates a greater
likelihood for large price movements while a
Table 5
Major Revenue Policy Base Prices1
CROP
Wheat, Winter ($/bu) (KS)
Wheat, Spring ($/bu) (ND)
Corn ($/bu) (IL)
Soybeans ($/bu) (IL)
Upland Cotton ($/bu) (MS)
Rice ($/cwt)
1Revenue Protection for 2014-21 as of May 11, 2021.
2
2014
7.02
6.51
4.62
11.36
0.78
13.90
Due to insufficient futures price data, revenue insurance was not available in 2015.
Source: RMA Actuarial Information Browser
CROPINSURANCE TODAY®
21
2015
6.30
5.85
4.15
9.73
0.63
2
2016
5.20
5.13
3.86
8.85
0.62
11.90
2017
4.59
5.65
3.96
10.19
0.73
10.40
2018
4.87
6.31
3.96
10.16
0.75
11.90
2019
5.74
5.77
4.00
9.54
0.74
10.80
2020
4.35
5.56
3.88
9.17
0.70
12.10
2021
4.90
6.53
4.58
11.87
0.80
12.70
% CHANGE
2019/20
-24.2
-3.6
-3.0
-3.9
-5.4
12.0
2020/21
12.6
17.4
18.0
29.4
14.3
5.0
2020 MPCI Premium and Loss Ratios-All Plans Combined
WA
0.57
MT
0.37
OR
1.28
ID
0.57
WY
1.26
NV
1.91
CA
1.26
UT
2.18
CO
1.45
AZ
1.52
NM
1.75
TX
1.47
Loss Ratio
0-50%
50-75%
75-100%
100-125%
125-150%
150-200%
200-300%
Data as of May 11, 2021
Source: RMA Summary of Business
Premium
0-10,000,000
10,000,000-100,000,000
100,000,000-250,000,000
250,000,000-500,000,000
500,000,000-1,024,000,000
ND
1.20
SD
0.84
IA
NE
0.41
KS
0.39
OK
0.64
1.03
IL
0.29
MO
0.44
AR
1.65
MS
1.11
LA
1.37
FL
0.57
IN
0.20
TN
0.68
AL
1.01
GA
0.72
OH
0.36
WV
KY
0.61
MN
0.40
WI
0.32
MI
0.53
NY
0.54
PA
0.98
0.94 VA
0.88
NC
1.25
SC
1.03
CT
0.43
NJ
0.41
DE
0.25
MD
0.37
NH
0.57
VT
0.76
ME
0.85
MA
0.58
RI
2.95

Crop Insurance Today Second Quarter 2021

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