Perspective: Morning Commentary for April 18
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Dairy and livestock insurance resource center
Get the most from your USDA insurance coverage by combining it with StoneX’s proven risk management strategies.
Insurance tools and risk management strategies
Leveraging USDA dairy and livestock insurance programs as a part of a larger risk management strategy helps producers protect revenue, lock in profits and potentially capture upside benefits. During times of high input costs and market price volatility, managing risk is critical. StoneX helps dairy farms and livestock operations effectively manage risk through three powerful insurance tools: Livestock Risk Protection, Dairy Revenue Protection, and Livestock Gross Margin.
Livestock Risk Protection
Customizable risk protection for fed cattle, feeder cattle and swine
Livestock Risk Protection (LRP) enables livestock operations to purchase cattle insurance coverage against adverse changes in the market prices of their cattle – helping them to effectively manage financial performance and profitability.
StoneX’s price-risk management professionals work with you to optimize your LRP coverage, to fit your business operations and needs.
How does Livestock Risk Protection work?
| Fed Cattle | Feeder Cattle | Swine |
| Available in all 50 states throughout the year | Available in all 50 states throughout the year | Available in all 50 states throughout the year |
| Producers can insure up to 12,000 head per endorsement / limit 25,000 per crop year | Producers can insure up to 12,000 head per endorsement / limit 25,000 per crop year | Producers can insure up to 70,000 head per endorsement / limit 750,000 per crop year |
| Premium is subsidized between 35%-50% depending on coverage level | Premium is subsidized between 35%-50% depending on coverage level | Premium is subsidized between 35%-50% depending on coverage level |
| Premium may be paid at the end of the endorsement period | Premium may be paid at the end of the endorsement period | Premium may be paid at the end of the endorsement period |
| Insurance periods ranging from 13 weeks to 52 weeks | Insurance periods ranging from 13 weeks to 52 weeks | Insurance periods ranging from 13 weeks to 52 weeks |
| Settled to CME national cash price index | Settled to CME national cash price index | Settled to price as reported by Agricultural Marketing Service (AMS) |
Dairy Revenue Protection
Customizable risk management for farms of all sizes
Dairy Revenue Protection (DRP) enables dairy farmers to protect revenue from adverse changes in milk prices, allowing them to lock in profits and protect from financial loss. DRP offers a unique opportunity for dairy farmers to take advantage of current market conditions by working with one of StoneX’s knowledgeable risk management consultants to create a plan that fits any operation.
How does Dairy Revenue Protection work?
| Mechanics | Premium Subsidies |
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Livestock gross margin
Livestock Gross Margin (LGM) is a federally reinsured livestock product that provides coverage against the loss of gross or finishing margins due to declining livestock prices or rising feed costs. LGM is determined using futures and options prices with the objective of identifying expected gross margin and actual gross margin. StoneX’s risk management consultants work closely with your business to track these price fluctuations to maximize profits.
How does Livestock Gross Margin work?
| LGM for Dairy | LGM for Cattle | LGM for Swine |
| Provides protection against the loss of gross margin (market value of milk minus feed costs) | Provides protection against the loss of gross margin (market value of cattle minus feeder cattle and feed costs) on fed cattle (yearling and calf) | Provides protection against the loss of gross margin (market value of hogs minus feed costs) |
| Available in all counties in all 50 states for the commercial or private sale of milk intended for human consumption | Available in all counties in all 50 states for yearling and calf finishing operations | Available to farrow-to-finish operations, feeder-pig finishing operations, and segregated-early weaned (SEW) operations in all 50 states |
| Producers can insure during any 11-month insurance period or year | Producers can insure cattle during any 11-month insurance period and up to 10,000 head per insurance year (July to June) | 6-month insurance period following the sales closing date, with coverage beginning in the second month |
| Sold each Thursday after the price guarantee is posted to the RMA site and ends the following day (Friday) at 9:00 AM Central | Sold each Thursday after the price guarantee is posted to the RMA site and ends the following day (Friday) at 9:00 AM Central | Sold each Thursday after the price guarantee is posted to the RMA site and ends the following day (Friday) at 9:00 AM Central |
| Insurance coverage begins one month and one day following the sales closing date | Insurance coverage begins one month and one day following the sales closing date | Insurance coverage begins one month and one day following the sales closing date |
| Premium is due at the end of the insurance periodDeductible amount available: $0 to $2 per hundred weight in 10¢ increments | Premium is due at the end of the insurance periodDeductible amount available: $0 to $150/head in $10 increments | Premium is due at the end of the insurance period-Deductible amount available: $2 to $20 per head in $2 increments |
| Premium subsidy is based on the deductible selected by the producer and ranges from 18% with $0 deductible to 50% with a deductible of $1.10 or greater | Premium subsidy will be based on the deductible selected by the livestock producer. Subsidy will range from 18% with $0 deductible up to 50% with a deductible of $70 or greater or according to the actuarials | Premium subsidy will be based on the deductible selected by the livestock producer. Subsidy will range from 18% with $0 deductible, up to 50% with a deductible of $12 or greater or according to the actuarials |
Reasons to get covered by StoneX
Deep agricultural expertise
StoneX boasts nearly 100 years of agricultural industry experience. From selling eggs door-to-door to becoming one of the nation’s largest commercial grain brokerage firms, StoneX lives and breathes farm culture and environment. Our risk management network’s boots-on-the-ground expertise cultivates a deep understanding of why our clients work the land for a living.
Access to powerful proprietary tools
Each of our insurance products has customizable elements that enable you to tailor your coverage precisely to your operation’s needs. StoneX’s proprietary insurance decision tools allow clients to optimize and compare alternatives. For dairy farmers, our Dairy Revenue Protection Decision Tool (DRPDT) helps identify opportunities and compare coverage options. Insightful hedge maps identify positions and performance levels so that you can make educated decisions quickly and easily.
Award-winning risk management consultants
Pricing, terms and payouts for federal insurance products are the same no matter where you purchase them from. The purpose of each product is also the same—reduce exposure to price risk. Purchasing your coverage through professionals who manage dairy and livestock price risk every day can help you choose coverage as part of a larger risk management strategy that can maximize the overall benefit of your insurance expenditure.
Explore our market coverage
When it comes to market coverage, there are few financial organizations that can match the breadth of StoneX. Explore our markets below.
Boots on the Ground: EU Dairy (Ireland)
Join Liam Fenton, Global Head of the Dairy & Food Group at StoneX, in the countryside of County Limerick, Ireland, as he explains the value of getting his boots on the ground on the Fenton family dairy farm, and how leveraging insights gained while growing up on the farm help him advise “from their side of the table.”
Join Liam Fenton, Global Head of the Dairy & Food Group at StoneX, in the countryside of County Limerick, Ireland, as he explains the value of getting his boots on the ground on the Fenton family dairy farm, and how leveraging insights gained while growing up on the farm help him advise “from their side of the table.”
Insurance Market Intelligence
Brazil Weather Forecast
Today 8:55 AM
Bi-Weekly Plastics Report - April 17, 2024
Yesterday 1:55 PM
CME Cash Market Summary
Yesterday 12:35 PM
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FAQ
How does livestock risk protection work?
Beef producers choose from a variety of coverage levels and insurance periods that correspond with the time their market-weight cattle would normally be sold. At the end of an insurance period, if the actual ending value is below the coverage price, the producer may receive an indemnity payment for the difference between the coverage price and actual ending value. Livestock insurance protects your investment should prices drop before your livestock gets to market, while preserving your upside potential. StoneX risk management consultants provide deep market and geographical intelligence to help businesses navigate these decisions and optimize results.
What does livestock insurance cover?
Livestock insurance is designed to insure against declining market prices. These insurance policies protect producers from adverse price changes in the livestock market by allowing them to establish a floor price for protection while leaving upside price potential open.
Let’s get connected
To learn more about how our customized financial solutions can help you stay one step ahead in the global markets, contact our team today.
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