Senior Farm and Ranch Broadcaster Ron Hays caught up with Dakota Moss, Livestock Risk Services President, to discuss locking in LRP with this year’s near-record high cattle prices.
“Going into October, we were in a pretty horrific drought, then we were pretty blessed to have some good, timely rains, in the first of November that really helped our fall winter wheat pastures just take off and start growing. That, in turn, incredibly increased demand for calves to turn out on that pasture,” Moss said.
In the past month and a half, the market has continued to grow stronger. The cattle feeder index for a seven- to nine-weight steer was at a historically high $263 per hundred at the time of Hays’s and Moss’s conversation.
“Looking back, at the first of November, we could cover cattle on the LRP – we were looking at $242 per hundred on steers for May, and today, we are looking $258 on those same steers for May,” Moss said. “So, we have seen a dramatic increase in the futures as well as LRP prices. A little bit of rain and a few other factors really helped this cattle market come along this last part of the year.”
Looking ahead to the fall of 2025, Moss urged producers to begin looking at unborn calf contracts for the following year’s calf crop due to the massive opportunities the contracts can offer.
“We really have no idea what 2025 holds,” he stated. “We need to be optimistic and hope for good things, but we also need to be cautious as we move into next year.”
Unborn calf contracts are one of the most under-used parts of the LRP program. The price is determined by the average weight a producer typically sells calves at.
“Off of yesterday’s market, we could have put $266 per hundred on a calf to be sold September 17th and it would have cost $10.20 per hundred,” Moss explained. “So you are looking at $50 per head on a five-to-five fifty-weight calf, but you are also locking in $266 per hundred. They look at that and say, ‘I’m going to net $266 after cost on these calves, that keeps me in the black on them, and that’s a good bunch to work off of for next year.’”
All business owners must be profit and margin-minded in all decisions. Moss noted that, from a cow calf producer’s perspective, LRP’s unborn calf contracts are a great decision for their business.
Stocker operators can utilize LRP as well. Moss said that once they have a load of cattle in hand, they can predict their planned marketing date and once the market closes that day, they can lock in the market of that day.
“We are even seeing, stocker operators buying cattle already for next August, and already locking those prices in,” Moss commented.
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