Margin Coverage Option (MCO) is a new area-based product protecting against operating margin declines, driven by falling crop prices, area yield losses, and/or rising input costs. This policy is an endorsement to your underlying MPCI policy for corn, soybeans, and wheat. The endorsement provides coverage against an unexpected decrease in operating margin with an 86% to 95% band of insurance. The sales closing date for MCO is September 30th.
- MCO’s revenue component is based on the same county yields used for other county products, such as SCO and ECO.
- The input cost included in MCO’s cost component varies by crop:
- For corn and wheat, the cost index includes urea, DAP, potash, and diesel
- For Soybeans, the cost index includes DAP, potash, and diesel
- MCO discovery periods:
- MCO input cost and price discovery period is 8/15 – 9/14.
- 2026 MCO Base Prices: Corn-$4.56; Soybeans-$10.73; Wheat-$6.34
- MCO input cost harvest period occurs during April using May futures contracts, while the harvest price discovery period is the same as the underlying MPCI policy.
- MCO input cost and price discovery period is 8/15 – 9/14.
- Indemnity Payments will not be determined until June of the following year, when final county yields are released for the prior year.
- Producers who purchase MCO can purchase SCO Coverage, but will be ineligible for ECO.
- MCO will be subsidized at 80%, the same as SCO and ECO for the 2026 crop year.
ADVANTAGES OF MCO:
- Lock in worst-case price/revenue/margin on top 9%
- Large ending stock and current trade issues
ADVANTAGES OF ECO:
- Lowest insurable margin in 5 years
- Current high Urea and DAP Base Prices
- Funds still holding large corn short positions
- ECO should be slightly cheaper than MCO
The Bottom Line – Do you feel like current prices/margins need to be locked in, or are you willing to wait until February when the ECO futures price is set? As mentioned above, the sales closing date is 9/30. If you are interested in looking at this product, give us a call at 218.935.2700.