Senior Farm and Ranch Broadcaster Ron Hays continues his conversation with Dakota Moss, Livestock Risk Services President, the first part of which was posted yesterday. Today, they are discussing the value of LRP as a risk management tool.
Moss’s consistent advice to producers asking whether it is the right time to lock in LRP is to do it if the current market conditions will keep them in the black on their cattle.
Hays and Moss spoke on December 19, 2024, and at that time, the market was down $3.50 on the futures contracts, so locking in that afternoon may have been lower than if a producer had acted that morning.
“It is good to hope for something better the next day, but nothing is guaranteed, so when you are in the black to cover those cattle, get it done,” Moss advised.
To get started, Moss said a producer must fill out an application so that he is ready to make his move when he sees fit as it takes about 24 hours to process applications through USDA’s system.
“Once it is cleared to go, we can cover cattle any time, any day of the week,” Moss said. “Even if they just want to get with us and start receiving daily LRP prices, we can set that up through email.”
Moss warned that once cattle are on a policy, they cannot be removed. If they lock the cattle in while pastures are good, then run out of grass or water and have to sell them early, their LRP is void and not revokable or refundable. In those instances, he recommends puts or hedges rather than LRP.
“You have to notice what is going on around you and keep an eye on the market,” Moss said. “We are incredible at growing and producing cattle, and sometimes the market and risk management can fall short, but its one of the most important parts of the business that we have to pay attention to.”
Experts project that prices will remain strong going forward, but Moss remember when they thought the same in 2014 and 2015, when the market fell out in 2015 – 2016. He said, “We need to be cautiously optimistic in our business and cover our risks. If it looks bright and shiny, it very well could be, but that black swan event could happen any time so I wouldn’t take any chances whether you are a stocker operator or a cow calf producer.”
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
