There's the cash price of wheat and the futures price and the Kansas City Board of Trade official Harvest Price. And they are far from equal.
This season there is a huge gap between the cash price being paid at country elevators and the commodity futures price at the Kansas City Board of Trade, leading many producers enrolled in a Revenue Assurance or Crop Revenue Coverage crop insurance to think they might be entitled to an insurance payment.
The official Harvest Price is computed by the Board of Trade to establish the price that will trigger CRC or RA program payments, and the methodology puts the price too high for producers to get a payment, even though the money they actually receive may be much lower.
Dalton Henry, governmental and membership affairs specialist with the Kansas Association of Wheat Growers says the Harvest Price is computed by the average daily settlement prices for the July hard red winter wheat futures contract.
The Harvest Price (called the Fall Harvest Price for RA) is used to value the production. This value is calculated differently for the 2 Revenue Plans:
* CRC: the Harvest Price is the June average daily settlement price for the harvest year's Kansas City Board of Trade July Hard Red Winter wheat futures contract. Up-to-date average prices can be viewed at the following website: http://www3.rma.usda.gov/apps/pricediscoveryweb/ActiveDiscoveryPeriods.aspx
* RA: the Fall Harvest Price is the July 1 to July 14 average daily settlement price for the harvest year's Kansas City Board of Trade July hard red winter wheat futures contract.
"This is one of those years that is especially challenging," Henry explains. "Kansas Wheat is working on identifying these challenges, and staying in constant contact with RMA, insurance providers and wheat producers. One thing that this year is illustrating is the need for producers to be familiar with the terms of any crop insurance program they are enrolled in."