2026 Crop Insurance RP Prices Settle Below Corn and Soybean Break-Evens

USDA's Risk Management Agency finalized the 2026 projected prices at the end of February, setting the Revenue Protection price election at $4.62 per bushel for corn and $11.09 for soybeans, with volatility factors of 0.15 and 0.13.

farmdoc and Purdue break-even work published before the March 15 sales closing date put 2026 cost of production near $5.00 for corn and $12.27 for soybeans on average-productivity Midwest ground. Revenue Protection is therefore insuring a spring price 8 to 10 percent below the cost of raising the crop.

Key Takeaways

• $0.38 and $1.18 per bushel below break-even on corn and soybeans respectively, roughly 8 and 10 percent. The gap, not the year-over-year price move, is what sets the loss structure.
• Volatility factors at 0.15 and 0.13 sit in the bottom quartile of the post-2012 distribution, which lowers premium collected per policy and pulls elections toward richer coverage at the same time.
• 3 to 5 loss ratio points from coverage-level migration alone, before any yield or harvest price outcome, as the cost of stepping from 80 to 85 percent coverage falls.
• Near 1.05 is the mean annual RMA loss ratio the below-break-even analog years imply at average yield, which would be the first print above the 1.0 statutory target since 2019.
• 60 to 80 percent of the operating gain the 2024 and 2025 book produced is a reasonable reinsurance year 2026 expectation for multi-peril writers under that scenario.

What the 2026 Deck Actually Set

The projected price averages December corn and November soybean new-crop futures settlements across February trading days under the Commodity Exchange Price Provisions. The volatility factor comes from implied volatility on near-the-money options on the same contracts over a five-day window at the end of discovery. Both feed the premium calculation and the coverage decision directly.

Soybeans rose $0.55 year over year and corn fell $0.08, but the year-over-year move is not the operative figure. The cross-section is: corn at $0.38 per bushel, roughly 8 percent, below the farmdoc break-even, and soybeans at $1.18, roughly 10 percent, below. Both volatility factors fell 0.02.

That combination, a projected price below break-even with compressed volatility, is the setup the 2012 and 2019 crop years shared going in. It is worth separating from the ordinary case where a weak price deck arrives with volatility rich enough to fund the resulting indemnities.

How a Below-Break-Even Price Transfers Loss

Revenue Protection pays when realized revenue, yield times the higher of projected or harvest price, falls below the guarantee of projected price times Actual Production History yield times coverage level.

Set the projected price below break-even and a grower harvesting an average yield against a flat or declining harvest price collects an indemnity anyway, because realized revenue falls short of the guarantee at normal production. The policy is doing what it was designed to do. The design simply transfers more loss to RMA when spring discovery signals a margin-distressed year.

Volatility compression pushes the same direction twice. It lowers the base premium dollar at a given coverage level, which makes stepping up cheaper, and it reduces the premium cushion collected per policy to fund indemnities when harvest price diverges from projected. On a representative 200-bushel APH corn acre in central Illinois, the grower-paid differential between 80 and 85 percent Revenue Protection ran roughly $9 to $11 per acre in 2025; under the 2026 factors it falls to roughly $6 to $8.

The subsidy schedule sharpens that. Premium subsidy runs 59 percent at 70 percent coverage, 55 at 75, 48 at 80 and 38 at 85, so the grower absorbs a rising share of a rising gross premium as coverage climbs. When the absolute step cost falls, elections move. Corn acres at 85 percent coverage plausibly move from roughly 22 percent in 2025 toward 26 to 28 percent, with soybeans going from roughly 18 percent toward 21 to 23.

A smaller deductible per acre across more acres raises the expected indemnity draw at any given yield and harvest price. The election migration alone is worth 3 to 5 points on the annual RMA loss ratio before weather enters the calculation.

The analog years bound the result. Against the RMA Summary of Business history, 2019, 2015 and 2016 all printed annual loss ratios between 0.89 and 1.05 on a similar below-break-even setup, with 2012 an outlier above 1.5 on the yield side. Running those analogs against the 2026 deck puts the mean near 1.05 at average yield, above the 1.0 statutory target for the first time since 2019.

The Harvest Price Option Breaks the Diversification Assumption

Revenue Protection carries the harvest price option by default, and it is the feature that makes this book behave unlike a property-casualty portfolio.

If the harvest price, the October futures settlement average for corn and November for soybeans, closes above the projected price, the revenue guarantee is recalculated upward. On a below-break-even spring price that option is worth more to growers and costs more in expected loss. A summer weather market that lifts December corn back above $5.00 per bushel against a trend national yield still produces indemnities across much of the insured base, because realized revenue at the higher harvest price against average yield often falls short of the stepped-up guarantee.

The geometry is the problem. A harvest-price-above-projected-price outcome draws indemnities across the entire Corn Belt book simultaneously, which compresses exactly the law-of-large-numbers benefit that geographic spread normally provides in multi-peril crop. In 2012 the corn harvest price was set at $7.50 against a projected $5.68, and the option alone carried a meaningful share of the 1.57 loss ratio RMA posted that year.

That lands on the Standard Reinsurance Agreement fund balances rather than on RMA alone. Approved insurance providers cede premium and losses across three funds, Assigned Risk, Developmental and Commercial, with the Commercial fund carrying the highest retention and the most upside. A national print near 1.05 with elevated coverage migration and harvest price exposure would put Commercial fund loss ratios at 1.00 to 1.10 across the Corn Belt states where retention concentrates.

That stays inside the profit-sharing bands for most companies and is still the tightest operating margin the book has run in five years, implying a reinsurance year 2026 outcome around 60 to 80 percent of the 2024 and 2025 gain. The compounding problem is on the other side of the balance sheet: writers holding farm-credit CLOs and private-credit structures face the same ag-economy stress as an asset risk, against the capital treatment questions raised in the NAIC SVO filing surge and the complex assets backing insurance reserves analysis. Two correlated tails from one economy is a different capital question than a 1.05 loss ratio read on its own.