When the pandemic hit in 2020 the cattle markets along with the rest of the world suffered. Many farmers and ranchers altered their marketing plans on crops and livestock to try and prevent a loss in the down Covid markets. This led to cattle being held months longer than planned hoping for a better market. Unfortunately for many farmers and ranchers they had no choice but to sell much heavier cattle into a down market. Resulting in a lower $/cwt price and profits lost.
On January 7th, 2020, I had a customer come into my office to lock in a floor price on his stocker calves to come off wheat in May. Using the Livestock Risk Protection Program, we locked in his price at $137/cwt for a May 5th maturity date on 180 head of 8cwt steers. As the Covid pandemic wrecked the livestock markets this producer stuck to his marketing plan and sold the cattle as planned the first week of May 2020 because he knew he was protected against the massive market decline. On May 5th, the CME Cattle Feeder Cash Index was at $119/cwt. The producer was compensated the $18/cwt difference between his coverage price and the CME Cash Index owed to him on his Livestock Risk Protection Policy. Resulting in a $144/head payment keeping him whole on those cattle that had price protection.
If you want to discuss livestock markets or getting a floor price under your cattle, please reach out to our office in the Oklahoma National Stockyards or one of our Livestock Agents. We look forward to working with you to protect your investment and livelihood.