More than 90 percent of wheat acres in South Dakota were covered by Revenue Protection during the 2013 crop year. For producers who plan to enroll 2014 winter wheat acres in crop protection, insurance and marketing decisions are going to be a bit different from in the past, said Matthew Diersen, Professor & SDSU Extension Risk/Business Management Specialist.

Diersen said the deadline to purchase or change winter wheat coverage is Sept. 30 in South Dakota. Most wheat is insured in the state, so the main choice this time of year is often related to the yield election level. Producers have until Oct. 15 to plant winter wheat with full insurance coverage.

The price discovery period spans from Aug. 15 to Sep. 14 and uses the Kansas City September 2014 futures price.

"That price has been averaging sharply lower than the insurance price from a year ago. The recent history of projected and harvest prices are shown in the table," Diersen said. "The projected price determines the base for both Yield Protection and Revenue Protection coverage."

Diersen said the volatility in the futures price has been lower this year than its five-year average of 0.29 and suggests with lower premium rates for 2014 that producers consider increasing the coverage percentage.

"The lower volatility and lower price level point to lower insurance premiums compared to last year. During 2013 most wheat was insured at the 70 percent level," he said.

He added that the use of revenue protection means most producers have adequate protection to allow for some pre-harvest wheat marketing.

"The low volatility levels at the present time likely make options strategies inexpensive," he said.

"In the event of higher prices by harvest, revenue protection coverage increases. As producers work on their marketing plans they should keep in mind that the insurance coverage is not unlimited, being capped at 200 percent of the base price," he said. "Covered sales, buying out-of-the-money call options, would be advised when marketing aggressively."

Diersen said producers should also consider the harvest time basis and how it lines up with insurance.

"Winter wheat insurance settles to the average during July of the Kansas City September contract," he said. "The basis, figured as the cash price received by farmers in South Dakota minus the average futures price in July, has averaged $-0.64 per bushel during the past five years. Hedges will likely be most effectively placed using the September contract and factoring in a similar basis level."

For more details review Chapter 9: Insuring Wheat in South Dakota of "iGrow Wheat: Best Management Practices for Wheat Production," found on iGrow.org