The insurance industry is expecting its largest-ever loss in agriculture as the Midwest's worst drought since 1956 brings billions of dollars in claims from corn and soybean farmers.
University of Illinois agricultural economists estimate the drought will trigger gross indemnities of about $30 billion, with an underwriting loss of $18 billion, Javier Blas and Alistair Gray of the Financial Times report. The U.S. government will take on about $14 billion of that, and private sector insurers will likely incur a loss of $4 billion. Economists Gary Schnitkey and Bruce Sherrick said some crop insurers are owned by public companies "who may not have realized the scope of losses that their crop insurance subsidiaries could generate." (Read more)
Meanwhile, the corn harvest is at its fastest pace ever because farmers planted early and the drought accelerated corn's maturity. About 6 percent of U.S. corn was harvested as of yesterday, compared to just 4 percent last week and none at this time last year, according to a Department of Agriculture report. About 26 percent of the crop was rated as mature, up from about 16 percent last week. Jeff Wilson of Bloomberg reports the trend increases the risk that wind and rain, perhaps from the remnants of Tropical Storm Isaac, will knock ears off stalks or blow plants over.
University of Illinois agricultural economists estimate the drought will trigger gross indemnities of about $30 billion, with an underwriting loss of $18 billion, Javier Blas and Alistair Gray of the Financial Times report. The U.S. government will take on about $14 billion of that, and private sector insurers will likely incur a loss of $4 billion. Economists Gary Schnitkey and Bruce Sherrick said some crop insurers are owned by public companies "who may not have realized the scope of losses that their crop insurance subsidiaries could generate." (Read more)
Meanwhile, the corn harvest is at its fastest pace ever because farmers planted early and the drought accelerated corn's maturity. About 6 percent of U.S. corn was harvested as of yesterday, compared to just 4 percent last week and none at this time last year, according to a Department of Agriculture report. About 26 percent of the crop was rated as mature, up from about 16 percent last week. Jeff Wilson of Bloomberg reports the trend increases the risk that wind and rain, perhaps from the remnants of Tropical Storm Isaac, will knock ears off stalks or blow plants over.
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