ASRG, Here is my take on the price insurance thing
only recently having taken it up for the first time.
We normally sell the smaller end of our feeders into
the spring market but I reckon it is quite a bit under
where it should be. So I have a bunch of steers that I
have enough feed and grass for - lets call them
600lbs now. That class is averaging about $150 cwt
just now. With all my costs calculated in my break-
even relative to selling them now would be about
$120 for them at 850lb in mid August. I bought
insurance the other day at $140 for $2.42 cwt based
on the 850lb sale weight - so just over $20/head.
If the average market price of 850lb steers is over
$140 in Aug I've just wasted $20/head but I can live
with that. If the average market price is $130 cwt I'll
get $10 cwt ($85/head) back from insurance on top
of whatever I get in the marketplace.
Once you get your head around it its really quite easy
- just a couple of forms and a phone call.
Looking back I see on the 23rd November last year
you could have bought feeder price insurance on
850lb selling now - $136 coverage was $2.03/cwt. So
likely the market average will settle between $120-
$128 triggering a payout of between $68-$136 a
head. Not a bad return for an investment of $17 an
animal. I think this is a valuable tool for small
producers as it allows us to lock in price protection
without having to trade contracts on whole liner loads
of cattle of the same weight which we might never
have. That's my take on it anyway - time will tell how
it pans out.
only recently having taken it up for the first time.
We normally sell the smaller end of our feeders into
the spring market but I reckon it is quite a bit under
where it should be. So I have a bunch of steers that I
have enough feed and grass for - lets call them
600lbs now. That class is averaging about $150 cwt
just now. With all my costs calculated in my break-
even relative to selling them now would be about
$120 for them at 850lb in mid August. I bought
insurance the other day at $140 for $2.42 cwt based
on the 850lb sale weight - so just over $20/head.
If the average market price of 850lb steers is over
$140 in Aug I've just wasted $20/head but I can live
with that. If the average market price is $130 cwt I'll
get $10 cwt ($85/head) back from insurance on top
of whatever I get in the marketplace.
Once you get your head around it its really quite easy
- just a couple of forms and a phone call.
Looking back I see on the 23rd November last year
you could have bought feeder price insurance on
850lb selling now - $136 coverage was $2.03/cwt. So
likely the market average will settle between $120-
$128 triggering a payout of between $68-$136 a
head. Not a bad return for an investment of $17 an
animal. I think this is a valuable tool for small
producers as it allows us to lock in price protection
without having to trade contracts on whole liner loads
of cattle of the same weight which we might never
have. That's my take on it anyway - time will tell how
it pans out.
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