Livestock Risk Protection

[Till-Hill]

Livestock Reports

If you click the link you can get to your state and what not and see what you can protect yourself at and what it costs.

Anyone done it on feeder calves before? It is interesting with the way the board is on these cattle and the way the world is today!

 

[Bigfoot]

I used to background several head. i stopped when cattle were headed through the roof in 2014, didn't want to get caught on the wrong side of it. I have backgrounded mine own every year, but not bought any. I looked at it back then, but my insurance man couldn't really explain it. Mainly because he never has any takers.

 

[Stocker Steve]

Yes

 

[Till-Hill]

Steve I'm pretty simple person but buying protection on 600# steers for 13 weeks for $23 locks in $1.82 cattle. $1092/head be highest I've sold cattle for. If market goes up I'm not going to be sorry I spent $23, if it goes down I collect a check from insurance. It sure seems smart.....I told agent to ride market up to $1.95 and lock it in or if it goes down to 1.75 to lock in. Holding tight at 1.80's this week

Yes

 

[Stocker Steve]

If you are leveraged, or you can not absorb a black swan event (the beef industry now seem to have one every year...), then LRP is probably a good idea. Sell-buy guys say they do not need it.

I think one reason LRP is used so much less than crop insurance is how the premium cost and the protection level change every afternoon. An averaging approach is to buy it for a periodically for a percentage of your cattle, as long as the level is above your price goal, till all the cattle are all covered. Say 25% once per week.

Your idea of giving the agent target(s) could make price volatility your friend. Let us know how it works out.

 

[Stocker Steve]

can

I used to background several head. i stopped when cattle were headed through the roof in 2014, didn't want to get caught on the wrong side of it.

Biggest local backgrounder did not buy LRP. He told me it reduced his profits too much. He went bankrupt in 2015-2016. Had a lot of nice stuff when the bank sold him out,,,

 

[Bigfoot]

can

Biggest local backgrounder did not buy LRP. He told me it reduced his profits too much. He went bankrupt in 2015-2016...

If it's $23 a head, I count my self lucky if I net $75. I still see the advantage of it though.

 

[KAstocker]

We had someone present LRP at a cattlemen's meeting. It seems too expensive for a stocker or backgrounder who works on margins. I can see why a cow calf guy could use it.

 

[Stocker Steve]

We had someone present LRP at a cattlemen's meeting. It seems too expensive for a stocker or backgrounder who works on margins. I can see why a cow calf guy could use it.

How would you compare LRP to forward contracting for cow calf operator ?

 

[KAstocker]

I've never used either, just researched them to keep in my back pocket. LRP is nice because it just sets a floor and doesn't lock you in at that price. I imagine with futures you could do that with options and be cheaper, though the subsidies are creeping into LRP, which I'd rather do without. Feeder future has to be at least 700 lb steer, and that's pretty heavy for a cow calf guy. I think LRP minimum is 600 lbs.

 

[Till-Hill]

After last nights close on cattle 600# steers 13 week premium is now up to $27/head. $188/cwt or $1128/head, that would be highest priced spring born steers I have ever sold.

900# 19 week premium is 12/20 sell date, $46/head @ $170.35 or $1533/head

That is some pretty good money. I wish I knew it was worth the investment.

I am looking at it this way tho. 4.5 cents a hundred to buy the premium. How many times has exact same cattle on same day brought 5 cents difference. That's just when 2 guys need to fill a load or a pen at the end of the day.....

 

[Dave]

After last nights close on cattle 600# steers 13 week premium is now up to $27/head. $188/cwt or $1128/head, that would be highest priced spring born steers I have ever sold.

900# 19 week premium is 12/20 sell date, $46/head @ $170.35 or $1533/head

That is some pretty good money. I wish I knew it was worth the investment.

I am looking at it this way tho. 4.5 cents a hundred to buy the premium. How many times has exact same cattle on same day brought 5 cents difference. That's just when 2 guys need to fill a load or a pen at the end of the day.....

That is a hair more than the commission at the sale yard. Or a hair less than if a stocker raiser give a shot of Draxxin to all the incoming calves.

 

[Stocker Steve]

Buy it and call it a locking in profit experiment.

No telling when we will have the next panic or fire or syndrome or whatever.