Your livestock are your livelihood. And through a Livestock Risk Protection (LRP) insurance policy, we can help you secure protection against declining market prices for you hogs, feeder and fed cattle.
lrp
how Coverage is Determined
- Initial coverage is set based on the futures market. Typically, the top-strike LRP offering is the same price as the corresponding futures market.
- Coverage for feeder cattle settles against the CME Feeder Cattle Index.
- Coverage for fed cattle settles against the 5-state area cash weekly value for 80% choice category.
Buying a Policy
You can sign up for LRP most days at 3 p.m. once prices have been set, but your signup must be completed no later than 8:25 a.m. CST the following day. Your premium will be billed two months after your coverage expires.
Your Choices
- Number of head to insure
- Length of coverage
- Coverage level — We typically use a level of 98 - 100%
- Target weight when coverage ends — This does not have to be an exact number rather a realistic expectation.
Additional Selections
- For feeder cattle, you must pick an accurate number of steers and heifers (except for unborn).
- Fed cattle includes steers and heifers valued at the same level.
- Fed cattle weight range must be between 1,000 - 1,600 pounds
- Feeder cattle have different categories, and each category uses a set factor to adjust price and premium. For example:
| Steers | Heifers | Unborn Calves | |
|---|---|---|---|
| 100-599 lbs. | 110% | 100% | 105% |
| 600-1,000 lbs. | 100% | 90% |
Requirements
- Delivery — Feeder cattle have no delivery requirements. Fed cattle do require sales records.
- Selling — Cattle must be retained to at least 60 days before the LRP end date. Fed cattle must be sold within 60 days after the LRP end date. Feeder cattle do not have to be sold.
Advantages
- Costs 25 - 30% less than put options
- No margin requirements
- You don't have to pay premium until later
- Feeder cattle LRP settles against the feeder cattle index.
