In 2015 the cattle market went through substantial ups and downs. Producers who purchased livestock price insurance had a level of protection to help offset the market volatility.
In the spring of 2015, 1,018 calf price insurance policies were purchased in Saskatchewan through the Western Livestock Price Insurance Program (WLPIP). This resulted in approximately 120,000 calves or 15 per cent of the provincial marketable calf crop being covered through the program. At the time the market was at record high levels and producers were able to purchase strong price insurance coverage.
In the fall the market declined from its highs and producers who purchased price insurance were in a benefit position. Last year 64 per cent of calf price insurance policies provided benefits as market prices in the fall were lower than the insured prices producers had purchased coverage on. WLPIP provided over $4.4 million in benefits to Saskatchewan producers.
This spring the cattle market has been volatile. The current volatility on the Chicago Mercantile Exchange (CME) is a strong indicator of the uncertainty for calf prices this fall. Driven by industry, WLPIP was developed from producers’ desire to have access to a risk management tool that would work similar to the CME’s livestock futures options (Live Cattle, Feeder Cattle and Lean Hog) but with additional protection against risks unique to the Canadian livestock market (currency and basis). The result is an insurance-based product designed to reflect real-market risks which serves as a one-stop hedging tool for producers.
May 31, 2016, is the last day price protection can be purchased for spring born calves that are traditionally marketed in the fall. Price insurance for the feeder cattle, finished cattle and hogs can be purchased year-round. Producers with questions about WLPIP can contact their local Crop Insurance office, call 1-888-935-0000, or go to saskcropinsurance.com.
