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| Cowboycorn - The prices on the link you provided are for southern state CRC and GRIP. The spring price discovery period for the majority of grain belt states is February.
Interestingly, the volatility factor affects the premium dramatically, compared with spring price. With Revenue Assurance, the last three years volatility factors (for Feb price states) ranged from .21 in 2005, to .26 in 2007.
This year, if the volatility factor equals 2005's .21, with a spring price of $5 (corn), PolK County IA( with a 175 yield history), a 75% RA policy will cost $21.06. An 80% RA policy would cost $35.17. If the volatility factor equals last years .26, those same two policies will cost $24.16 (75%) and $39.79 (80%).
Surprisingly, if the spring price were to be 50 cents higher, at $5.50, but still with a .21 volatility factor (10% higher spring price than the above example), both levels would still be less premium than a $5.00 spring price with .26 volatility. This $5.50/.21 premium would equal $23.17 (75%) and $38.69 (80%).
Attached is an RMA link to track spring prices and volatility:
http://www3.rma.usda.gov/apps/pricediscoveryweb/DailyPrices.aspx
Edited by robheyen 1/27/2008 08:44
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Febrauray - D-day for crop insurance pricing
