Market yearlings on future delivery contract.

[samsdad]

Last week, I got an unsolicited and very attractive offer to contract yearlings for delivery off grass in September. At the same time, I can price protect with the WLPIP at attractive values (and some expense). I think the insurance program is the right way to go. Am I right?

[grassfarmer]

I don't know - if you got an actual fixed price contract you'd know what you were getting for your cattle. With the price insurance you get a top up if the market average drops but you still don't know your sale price. What if you are $15cwt below the market averages used to calculate the insurance payout? Maybe a bad place in the sale where you don't get the value you should? Price insurance doesn't make that up. If it was a fixed price contract and I was very happy with the price I think I'd go that way.

[smcgrath76]

I would do some careful math. The WLPIP premiums have been pretty expensive of late. If you price insure grass cattle and the premium is $10 , you have to take that off the price, plus shipping and marketing costs. $10 premium on an 850# calf is $85 shipping ($20?) marketing charges ( $20). I might lean towards the contract as a better form of risk management if it is reasonable and with a reputable outfit.

[Horse]

Dont know this insurance program. I do know back a few yr I had 150 yrl on grass for a fellow and they were locked in at .88 and when they called for them they went through the ring at Clyde for $1.08 and the owner just sat with his head in his hands. .20 on 850# $170/ head, lost a lot being safe.
And that was a suprise also as he thought he could pick the date from aug to nov but no they decided when you had to sell. Pretty expensive lesson learned so check all parts of contract.

[blackjack]

Well said grassfarmer.I was at some bull sales recently surprised how many producers are under the perception the insurance guarantees them a certain price.

[wilagro]

Price protection insurance guarantees one thing well...a profit for the issuer of that insurance. Why do you think it is available?

The Alberta scheme would be gone if it was a loser. This arms-length government controlled entity is NOT a welfare scheme for farmers and ranchers.

A fixed contract is damned near as bad depending on current prevailing markets. Things are damned good right now. I wouldn't contract with anyone unless it was entirely on MY terms. To hell with the leeches.