LIVESTOCK GROSS MARGIN - CATTLE
An insurance product for those finishing cattle that protects against:
- Declining prices of fed/live cattle
- Increasing corn prices
- Increasing feeder cattle prices
LGM-Cattle allows those who own cattle being finished for slaughter to protect their projected margin between the value of their finished cattle and their input costs (corn and feeder cattle), sometime called the “cattle crush.”
Overview: The Livestock Gross Margin for Cattle (LGM for Cattle) Insurance Policy provides protection against the loss of gross margin (market value of livestock minus feeder cattle and feed costs) on cattle. The indemnity at the end of the 11-month insurance period is the difference, if positive, between the gross margin guarantee and the actual gross margin. The LGM for Cattle Insurance Policy uses futures prices to determine the expected gross margin and the actual gross margin. Adjustments to futures prices are state- and month-specific basis levels. The price the producer receives at the local market is not used in these calculations.
Eligible Livestock: Cattle sold for commercial or private slaughter primarily intended for human consumption and fed in CO, IL, IN, IA, KS, MI, MN, MO, MT, NE, NV, ND, OH, OK, SD, TX, WV, WI, and WY.
Eligible Producers: Producers who own cattle in CO, IL, IN, IA, KS, MI, MN, MO, MT, NE, NV, ND, OH, OK, SD, TX, WV, WI, WY.
WHY LGM Cattle?
- Premium discounts up to 50%
- No margin calls
- No brokerage fees
- Simple: Straightforward policy with no surprises
- Effective: Protects the margin between typical input costs to finish cattle and fed cattle prices
LGM Features: LGM for Cattle has two advantages features.
Producers can sign up for LGM for Cattle twelve times per year and insure all of the cattle they expect to market over a rolling 11-month insurance period. The producer does not have to decide on the mix of options to purchase, the strike price of the options, or the date of entry.
The LGM for Cattle policy can be tailored to any size farm. Options cover fixed amounts of commodities and those amounts may be too large to be used in the risk management portfolio of some farms.
LGM v Other Risk Management Tools: USDA’s premium subsidy makes risk management affordable.
Subsidy for Pooled Coverage
Subsidy for Unpooled Coverage
Types of Operations: There are two types of options for LGM for Cattle.
- Yearling Operation: A type of farm operation that purchases yearling steers and heifers and feeds them until slaughter.
- Calf Finishing Operation – A type of farm operation that purchases 550-pound calves and feeds them until slaughter.
- 12 annual insurance periods than run 11 months each
- No cattle can be insured the first month
- Coverage begins one full calendar month following the sales closing date.
Enrollment: LGM for Cattle is sold on the last Friday that is a business day of each month. The sales period ends at 8:00 PM central the following day.
More Information: Ranchers Insurance is a USDA-approved insurance agency that specializes in LGM-Cattle. Call us at (435) 213-0463 for more information on how LGM for Cattle would have performed for you historically.
Limitations: LGM for Cattle does not insure against death loss or any other loss or damage to the producer’s cattle.
Get In Touch:
Call: (435) 213-0463