The Collision Nobody Plans For
Prevent plant happens when weather keeps you out of the field past the final planting date for insurance purposes. The cruel arithmetic: the same wet spring (or drought, in some regions) that prevents your planting usually prevents millions of acres nationally — and the market rallies on the expected short crop. Prices rise hardest exactly when you have the fewest bushels to sell.
If you forward contracted spring bushels — a common, usually sensible practice — you are now short bushels into a rally. The buyout price climbs with every rain delay report. This is the scenario that makes disciplined producers swear off early sales entirely, which is its own mistake.
How Insurance Responds
Prevented-planting coverage pays an indemnity — typically a percentage (often 55-60% for corn unless a higher buy-up was selected) of your revenue or yield guarantee on acres you could not plant. Revenue policies with harvest-price exclusion versus inclusion matter here: if prices rally after spring, harvest-price-inclusive coverage adjusts guarantees upward, which better offsets contract buyouts.
Two cautions. The prevent plant indemnity is a fraction of full coverage, not a replacement crop. And taking the full prevent plant payment versus planting late or taking a reduced payment is a per-acre decision with real money at stake — run it with your agent, acre by acre if needed.
Managing the Hedges You Already Have
- Inventory your exposure immediately. List every contract, HTA, and hedge against realistic planted acres, not planned acres.
- Talk to buyers early. Elevators deal with prevent plant every wet year. Rolls, deferrals, and negotiated settlements get harder the longer you wait and the higher the market runs.
- Prefer obligation-free price tools in risky springs. Put options and futures hedges can be lifted or offset without delivery; forward contracts cannot. Futures and options trading involves substantial risk of loss and is not suitable for all investors.
- Do not revenge-trade the rally. The urge to buy calls to win back the crop you lost is how a bad spring becomes a bad year. Protect the business; the speculation can wait.
The producers who come through prevent plant best are the ones who contracted conservatively — inside insured bushels — and treated the spring as a risk-management problem, not a trading opportunity.