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 per bushel for soybeans. The accompanying volatility factors landed at 0.15 for corn and 0.13 for soybeans, both down from the 2025 deck and at the low end of the post-2012 distribution. University of Illinois farmdoc and Purdue break-even work released in the weeks before the March 15 sales closing date put the 2026 cost-of-production floor near $5.00 for corn and $12.27 for soybeans on average-productivity Midwest ground. That leaves Revenue Protection policyholders insured to a spring price that is already 8 to 10 percent below the cost of raising the crop.

Farm-press coverage has framed this as a margin story for growers. The actuarial read is different. From running the 2012 and 2019 RMA loss ratio analogs against the 2026 price deck, the scenario where projected price sits below break-even and volatility factors compress tends to produce a mean loss ratio near 1.05 at average yield. That would push the annual RMA loss ratio back above the 1.0 statutory target for the first time since 2019 and reshape the Standard Reinsurance Agreement fund balance for multi-peril crop writers like Rain and Hail, CHS, Great American, Zurich, and the smaller specialty carriers that earn through the SRA pool.

The 2026 price deck in one table

The projected price is established by averaging December corn and November soybean new-crop futures settlement prices across February trading days, per the RMA Commodity Exchange Price Provisions. The volatility factor is derived from the implied volatility of near-the-money options on the same futures contracts over a five-day window at the end of the discovery period. Both inputs feed directly into the premium calculation and the coverage decision.

Input	2025 Final	2026 Final	Change
Corn projected price (per bu)	$4.70	$4.62	−$0.08
Corn volatility factor	0.17	0.15	−0.02
Soybean projected price (per bu)	$10.54	$11.09	+$0.55
Soybean volatility factor	0.15	0.13	−0.02
Illinois high-productivity corn break-even (farmdoc)	$4.90	~$5.00	+$0.10
Illinois high-productivity soy break-even (farmdoc)	$11.82	~$12.27	+$0.45

The relevant gap for actuarial work is not the year-over-year move. It is the cross-section: projected price on the corn book is $0.38 per bushel, or roughly 8 percent, below farmdoc's 2026 break-even estimate, and projected price on the soybean book is $1.18 per bushel, or roughly 10 percent, below break-even. That is a structural signal the 2012 and 2019 analogs both shared going into their respective crop years.

Why below-break-even projected prices push RMA toward a 1.0 loss ratio

Revenue Protection pays when realized revenue (yield multiplied by the higher of projected or harvest price) falls below the revenue guarantee (projected price multiplied by Actual Production History yield multiplied by coverage level). With projected price set below break-even, a grower who harvests an average yield against a flat or declining harvest price collects an indemnity because realized revenue falls short of the guarantee even when production is normal. The policy is working as designed, but the design transfers more loss to RMA when the spring discovery price signals a margin-distressed crop year.

The RMA Summary of Business loss ratio history makes the pattern explicit. Years where the spring corn projected price came in below $4.00 per bushel with volatility factors compressed below 0.17, or where soybean projected price came in below $10.50 per bushel with similar volatility compression, have run higher annual loss ratios than years with richer price decks. The 2012 drought year is the outlier on the yield side (LR above 1.5), but the 2019 prevent plant year and the 2015 and 2016 crop years all printed annual loss ratios between 0.89 and 1.05 against a similar projected-price-below-break-even setup. From tracking those cycles, the mean loss ratio across those four analog years was roughly 1.00, with tail observations either side.

The 2026 setup rhymes with 2019 more than with 2015 and 2016 for one specific reason: the volatility factor compression. At 0.15 and 0.13, corn and soybean volatility factors are at the bottom quartile of the post-2012 distribution. That compression does two things at once. It lowers the base premium dollar at a given coverage level, which pulls more policyholders toward higher coverage elections (80 and 85 percent) because the marginal cost of stepping up is smaller. It also reduces the premium cushion RMA collects per policy to fund indemnities when the harvest price diverges unfavorably from the projected price. Both effects push the expected loss ratio higher, not lower.

Coverage-level elections at 80 and 85 percent: the uptake math

Coverage-level election is the single largest lever growers pull between February projected prices and the March 15 sales closing date. The RMA premium subsidy table gives a 59 percent subsidy at 70 percent coverage, 55 percent at 75 percent coverage, 48 percent at 80 percent coverage, and 38 percent at 85 percent coverage. The absolute dollar cost per acre rises sharply between 80 and 85 percent because the grower absorbs a larger share of a larger gross premium.

When volatility factors compress, the dollar cost of stepping from 80 to 85 percent coverage drops in absolute terms. On a representative 200-bushel APH corn acre in central Illinois, the grower-paid premium differential between 80 and 85 percent Revenue Protection was roughly $9 to $11 per acre in 2025. Under the 2026 volatility factor compression, the same differential falls to roughly $6 to $8 per acre. Growers looking at a projected price already below break-even treat that smaller step as cheap incremental margin protection and elect up. Patterns we have seen in recent crop years suggest 85 percent coverage elections on corn could rise from roughly 22 percent of insured acres in 2025 to 26 to 28 percent in 2026, with soybean 85 percent election rates rising from roughly 18 percent to 21 to 23 percent.

For RMA and the private delivery companies, more acres at 85 percent coverage means a smaller self-insured deductible per acre and a higher expected indemnity draw at any given yield and harvest price outcome. Even without a harvest price rally, the loss ratio effect from coverage-level migration alone is in the range of 3 to 5 points on the annual RMA book.

SCO and ECO add-on uptake on a below-break-even deck

The Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO) are the county-level shallow-loss products that sit on top of the underlying individual RP policy. SCO covers the band from the underlying coverage level up to 86 percent county revenue; ECO extends coverage to 90 or 95 percent county revenue. Both were expanded and their subsidies raised under the 2018 Farm Bill and subsequent updates, with ECO in particular taking on an enhanced subsidy rate of 65 percent of premium for the 2026 crop year.

ECO uptake in 2024 and 2025 ran well below the 10 percent market penetration that program architects had targeted, in part because growers carrying 80 or 85 percent underlying RP already had a narrow shallow-loss band and the marginal protection of ECO felt redundant. Under the 2026 deck, that calculus changes. With projected price below break-even, the shallow-loss band between 86 percent county revenue and 90 or 95 percent county revenue becomes economically valuable because harvest-price divergence, not yield variability, is the primary loss driver. Growers and their insurance agents are more likely to layer ECO on top of RP in 2026 than in any year since the enhanced subsidy took effect.

For actuaries pricing the private delivery side, rising SCO and ECO uptake is a dual-edged input. It grows book premium at subsidized rates, but it concentrates loss exposure in county revenue triangles where basis risk and county yield estimation both become more material. The RMA reinsurance of SCO and ECO is handled separately from the underlying RP book within the SRA, and the profit-sharing bands on those products are tighter.

Harvest price option exposure and the asymmetric tail risk

Revenue Protection includes the harvest price option by default. If the harvest price (the October futures settlement average for corn, November for soybeans) closes above the projected price, the revenue guarantee is recalculated at the higher harvest price. That converts the contract into a guarantee against both yield shortfall and upside price movement, which matters because yield shortfalls often coincide with futures rallies (the drought scenario).

On a below-break-even projected price, the harvest price option becomes more valuable to growers and more expensive to RMA in expected-loss terms. A 2026 growing season scenario where weather markets rally December corn futures back above $5.00 per bushel by mid-summer and national yield prints at trend would still produce Revenue Protection indemnities across much of the insured base because realized revenue at the higher harvest price against an average yield often still falls below the step-up guarantee. The harvest price option effectively resets the coverage floor intra-season.

From the RMA and reinsurer perspective, this is a tail-risk geometry unlike typical property-casualty loss distributions. Harvest-price-above-projected-price scenarios drive a correlated indemnity draw across the entire Corn Belt book at the same time, compressing the law-of-large-numbers benefit that multi-peril crop insurance normally enjoys across geographically diverse policies. The 2012 year remains the canonical illustration: harvest price for corn was set at $7.50 per bushel against a projected price of $5.68, and the harvest price option alone was responsible for a meaningful share of the 1.57 loss ratio that RMA posted that year.

Standard Reinsurance Agreement fund balance: the actuarial wrinkle

The Standard Reinsurance Agreement governs the profit-and-loss sharing between RMA and the approved insurance providers (AIPs) that deliver multi-peril crop insurance. Under the current SRA effective for reinsurance year 2026, AIPs cede premium and losses to RMA across three funds: Assigned Risk (the highest-risk policies RMA reinsures most heavily), Developmental, and Commercial (the lowest-risk, highest-retention fund where AIPs keep the most upside). The net gain or loss position for an AIP in a given reinsurance year depends on the loss ratio outcomes across all three funds and the company's retention choices by state and product.

From tracking the 2015 through 2025 SRA years, AIPs that leaned heavily into Commercial fund retention in years where projected prices sat near or above break-even captured meaningful underwriting gains, particularly in the 2020 through 2023 stretch when record projected prices collided with generally favorable growing conditions. A 2026 crop year where the annual RMA loss ratio prints at 1.05 with coverage-level migration and harvest-price-option exposure both elevated would produce a commercial fund loss ratio in the 1.00 to 1.10 range across the Corn Belt states where these AIPs concentrate their retention. That is still inside the SRA profit-sharing band for most companies, but it is the tightest operating margin the multi-peril book has seen in five years.

The capital implication is that multi-peril crop writers should be modeling a reinsurance year 2026 outcome in the range of 60 to 80 percent of the operating gain the book generated in 2024 and 2025. That is not a capital-threatening scenario in isolation, but it compounds with two other capital drags showing up on insurer balance sheets: the CLO and private-credit mark-to-market concerns raised in the NAIC SVO filing surge and the complex-asset capital treatment discussion in the complex-assets-backing-insurance-reserves analysis. Crop writers with meaningful invested-asset exposure to farm credit CLOs and private-credit structures are holding two asset-side and liability-side tails from the same ag-economy stress at the same time.

Why the actuarial read differs from the farm-press framing

Farm-press coverage of the 2026 projected price release emphasized grower margin stress: high input costs, weak cash prices at the elevator, and a general sense that the 2026 crop year will test working capital and farm credit availability. That framing is accurate on its own terms but it is silent on the insurance transfer mechanism that converts grower margin distress into RMA loss ratio outcomes and SRA fund balances.

The insurance-press framing, when present at all, has been narrowly focused on whether projected prices were going to clear grower break-even and whether the March 15 sales closing date would see normal take-up. Both of those questions were answered (no and yes, respectively) in the first two weeks of March, and the industry trade press moved on. What it left unsaid is that the combination of below-break-even projected price, compressed volatility factors, coverage-level migration, and harvest-price-option geometry produces a specific expected-loss structure for 2026 that RMA and the AIPs will spend the rest of the year managing.

For crop actuaries and for the broader pool of P&C actuaries whose carriers own equity stakes in crop AIPs or who underwrite excess-of-loss reinsurance into the SRA Assigned Risk fund, the question is not whether 2026 will print a loss ratio above 1.0. It is how far above 1.0 the final print lands and how the profit-sharing bands in the SRA absorb the result. A 1.05 mean expectation is manageable. A tail scenario that pushes the national loss ratio above 1.20 (plausible under a 2012-style weather market rally from a below-break-even spring price) would exhaust most AIP commercial-fund retention and drive a reinsurance recovery pattern that reshapes the 2027 SRA negotiation.

What to watch between now and December

Between the April USDA supply and demand prints and the October harvest price discovery window, a few signals will tell crop actuaries and reinsurance counterparties how the 2026 expected loss ratio is evolving:

• June 30 Acreage report and August WASDE yield estimates. A planted-acres shift toward soybeans would relieve corn market pressure but could compound soybean margin distress given the below-break-even projected price already embedded. WASDE yield prints below trend by mid-summer would widen the harvest-price option exposure.
• Basis trends in the July through September window. Tight physical basis in the Corn Belt combined with weak futures prices is the ag-economy signal that correlates most strongly with the harvest-price option activating a broad Revenue Protection indemnity draw. Basis widening ahead of harvest is a bearish signal for RMA.
• Harvest price discovery in October and November. The October corn futures and November soybean futures settlement averages determine the harvest price. A rally above the projected price of $4.62 corn or $11.09 soybeans activates the harvest-price option on every RP policy in force and is the single largest swing factor in the annual RMA loss ratio.
• AIP quarterly SRA position disclosures. Large AIPs report ceded and retained premium and loss positions under SRA through their holding company filings. Mid-year disclosures from Zurich, Great American, and CHS will tell reinsurance counterparties whether the Commercial fund retention assumptions that drove 2024 and 2025 gains are holding for 2026.
• 2027 projected price discovery in February 2027. A second consecutive below-break-even spring price deck would be a structural signal that the multi-peril crop insurance book has entered a multi-year elevated loss-ratio regime, which would reshape SRA renegotiation discussions scheduled to open in the 2028 cycle.

Why this matters for actuaries

Crop insurance is often treated as a specialty corner of P&C practice, but the 2026 setup has implications that touch well beyond the desk of crop-focused actuaries:

• Below-break-even projected prices convert a margin story into a loss-ratio story. The insurance transfer mechanism means that grower distress shows up on RMA and AIP balance sheets within the same crop year, not deferred by production or sales timing. Actuaries should be modeling a 2026 annual RMA loss ratio in the 1.00 to 1.10 range as a central expectation, with wider tails than the 2020 to 2023 years suggested.
• Volatility factor compression drives coverage-level migration. Elections at 85 percent coverage rise when the dollar cost of stepping up falls. The loss-ratio effect from election migration alone is 3 to 5 points on the annual book, before any harvest-price or yield consideration.
• Harvest-price option geometry is not standard property-casualty tail risk. Correlated intra-season indemnity draws across the Corn Belt violate the geographic diversification assumption that normal multi-peril pricing relies on. The 2012 analog remains the cleanest illustration.
• SRA fund balances compound with invested-asset risk. Multi-peril crop writers with meaningful CLO and private-credit exposure are running two correlated tails from the same ag-economy stress. That matters for holding-company capital planning in a way that standalone crop-book analysis misses.
• Government-backed benchmarking has parallels in other programs. The RMA loss-ratio target, the SRA profit-sharing bands, and the subsidy geometry that drives coverage-level elections rhyme structurally with the Medicare Part D redesign year-one data dynamics and the Milliman pension buyout index benchmarking patterns that actuaries in other practice areas already follow. Reading across those programs sharpens the RMA read.

The 2026 projected prices are not a surprise. RMA's process for setting them is deterministic and the February futures settlement data were visible in real time. What the finalized numbers confirm is that the 2026 crop year enters the growing season with a Revenue Protection price floor that sits below the cost of production for the average Midwest grower, with compressed volatility factors that pull policyholders toward richer coverage, and with a harvest-price option that converts any summer weather-market rally into a correlated indemnity draw across the insured base. That is the setup the 2012 and 2019 analogs share, and it is the setup that produces RMA loss ratios at or above 1.0 under average yields. For crop actuaries, the next six months of WASDE prints, basis signals, and harvest-price discovery will determine whether 2026 lands near the 1.05 central expectation or tails further out. For P&C actuaries at multi-peril writers, the SRA fund balance arithmetic is already worth building into mid-year capital reforecasts rather than waiting for year-end.