LRP Insures Livestock Against Price Declines

Livestock Risk Protection (LRP) A New Price Risk Management Tool for Livestock Producers Tim Petry, Livestock Economist 01-28-10 LRP – Cattle Feedlot School – Jan2011

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Livestock Price and Production Patterns ,[object Object],[object Object],[object Object],[object Object],BSE H1N1 Oprah 9/11 Competing Meats Export Bans E Coli HSUS videos DAIRY BUYOUT Dock Strike Foot and Mouth Animal Rights Avian Influenza Government Regulations

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LRP – Feeder Cattle ,[object Object],[object Object],[object Object]

CME Feeder Cattle Index 16% 21% 19% 22% 10% ?

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Fall Steer Calf LRP Results July 15 to Oct 15 (13 wk) Nov 15 (17 wk) Year Coverage Price Premium Actual Price LRP Payment LRP Profit 2007 125.38 2.68 124.06 1.32 -1.36 2008 120.52 2.79 107.57 12.95 10.16 2009 112.22 3.03 102.58 9.64 6.61 2010 121.04 2.36 118.23 2.81 .45 Year Coverage Price Premium Actual Price LRP Payment LRP Profit 2007 123.20 2.58 119.27 3.93 1.35 2008 127.38 5.46 107.37 20.01 14.55 2009 112.18 3.73 102.94 9.24 5.51 2010 121.02 2.88 122.61 -- -2.88

SF_LS766 Sioux Falls, SD Thu Nov 18, 2010 USDA-ND Dept Ag Market News Stockmens Livestock Exchange - Dickinson, ND Feeder Cattle Weighted Average Report for 11/18/2010 Receipts: 4601 Last Week: 3650 Year Ago: 3936 Compared to last week: Steers calves traded 2.00 to 4.00 higher. Heifer calves traded steady to 3.00 higher. Demand was good with active trading. Steers made up 55 percent. Heifers made up 44 percent. Feeder bulls made up 1 percent. 52 percent over 600 lbs. Next sale is scheduled for December 2, 2010. Feeder Steers Medium and Large 1 Head Wt Range Avg Wt Price Range Avg Price 11 328-330 329 143.00-144.00 143.54 11 373-386 378 147.00-147.75 147.47 52 419-440 433 142.50-148.50 145.27 113 452-499 467 134.50-140.75 138.28 158 506-544 533 126.50-135.50 130.22 115 509-527 521 136.25-138.25 136.92 Fancy 145 559-599 582 117.75-127.75 122.50 30 561 561 132.00 132.00 Fancy 579 600-648 630 114.00-122.75 119.27 Calves 199 651-695 675 113.50-119.00 116.68 Calves 14 658 658 124.00 124.00 Fancy 250 700-739 715 112.00-118.25 114.74 Calves

Backgrounding Steer LRP Results Aug 25 to Jan 20 (21 wk) Year Coverage Price Premium Actual Price LRP Payment LRP Profit 2007-08 116.05 3.70 97.16 18.89 15.19 2008-09 106.01 3.23 95.14 10.87 7.64 2009-10 99.98 2.82 97.46 2.52 -.30 2010-11 116.01 3.56 127.27 0 -3.56

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Fed Cattle (Steers or Heifers) ,[object Object],[object Object],[object Object],[object Object],[object Object]

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Cattle LRP Timetable MARKET CLASS MARKET DATE LRP CONTRACT 13 17 21 26 Under 600 Nov 15 AUG JUL JUN MAY Over 600 Feb 15 NOV OCT SEP AUG Fed Jul 15 APR MAR FEB JAN

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Steps to LRP ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Volatile Prices – Price Risk Management Necessary! Questions?

LRP Insures Livestock Against Price Declines

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LRP Insures Livestock Against Price Declines