Eastern Corn Belt Cattle Basis (June 6, 2007)
Monthly Dried Distiller's Grain Prices and Graphs (November 28, 2006)
Weekly Data Set for Distiller's Grains and Other Feeds (Updated July 3, 2007)
ECB Cattle Finishing Weekly Net Returns Spreadsheet (Updated May, 2007)
ECB Hog Finishing Weekly Net Returns Spreadsheet (Updated May, 2007)
Fall Calf Price Outlook (September 2006)
Feeder Cattle Prices and Higher Feed Prices (November 2006)
Implied Cattle Demand Index: Overview and 2006 Example Calculations
Spreadsheet for Updating 2006-07 Implied Cattle Demand Index (updated April 2006)
Seasonal Cull and Stock Cow Prices: Kentucky Auction 1993 - 2006
Seasonal Feeder Cattle Price Tables: Kentucky Auctions 1993 - 2004
Livestock Revenue Insurance Materials:
List of Ohio Agents Selling Livestock Price Insurance Policies
Roe' World Pork Expo Presentation: LRP vs. Futures and Options
An Example Comparing LRP to Put Options for Fed Cattle - discussion paper
An Overview and Comparison to Futures-based Down-side Price Protection for Ohio Hog Producers - powerpoint presentation
Eastern Corn Belt Hog Basis including basis against CME cash price index
Ohio Fed and Feeder Cattle basis charts, including basis used for LRP contracts.
Hedging Fed Cattle Prices Using Put Options: Several Examples from September 2003
Purchasing and Sales Patterns of Ohio Dairy Farms: Results of the 2002 Ohio State Dairy Survey
Another Way to Manage Livestock Risk
The USDA recently announced that, starting on October 1, hog producers, feedlot operators, back grounders, and cow-calf operators in Ohio and 18 other states will have an additional price risk management tool available: a livestock revenue insurance policy called Livestock Risk Protection (LRP). The principle is simple: you insure against downward movement in hog or cattle prices that might occur after you have committed to growing them. For those familiar with futures and options lingo, this is essentially a put option. Unlike standard put option, however, it covers as many or as few animals as you want and can be customized to work for heifers and lighter weight cattle not traditionally covered by futures and options contracts offered by the Mercantile Exchange.
Here are a few links to sites that discuss the programs or to analyses that have been complete for states like Iowa, that were part of a pilot LRP program that started in 2002. (Another related program called Livestock Gross Margin insurance (LGM) will not be made available in Ohio).
A link to the USDA web site announcing the program:
http://www.rma.usda.gov/news/pr/2004/08/812livestock.html
A link to a page listing agents who will sell the insurance:
http://www3.rma.usda.gov/apps/agentslpi/index.cfm
An Iowa State publication that provides a general overview of the pilot programs as implemented in Iowa during 2002 (some changes have occurred and LGM is not available in Ohio):
http://www.extension.iastate.edu/Publications/FM1871.pdf
This link analyzes how well Iowa hog farmers would have done last year had they used LRP rather than options:
http://www.econ.iastate.edu/outreach/agriculture/livestock/LivestockInsurance.pdf
This link provides information about how the program has changed since the version that was offered in 2003:
http://www.agmanager.info/crops/insurance/risk_mgt/rm_html04/AB04lrp.asp
Finally, these links to the University of Nebraska website provide a detailed analysis of how the new programs might work, with a special focus on issues for Great Plains producers:
Fed Cattle: http://agecon.unl.edu/mark/Papers/EC04-834.pdf
Feeder Cattle: http://agecon.unl.edu/mark/Papers/EC04-835.pdf
Hogs: http://agecon.unl.edu/mark/Papers/EC04-833.pdf
As more details about the contracts are posted by USDA, and initial premiums get posted, I will work through several examples of how the coverage would work, how it stacks up against other risk management options, and make these available to interested readers.