CATTLE FUTURES FOR RANCHERS
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CATTLE FUTURES
Cattle Futures are CTFC-regulated, exchange trade contracts on the Chicago Mercantile Exchange (CME). Futures contracts enable ranchers to lock in a price for their cattle with the promise to transfer ownership at a later date. This type of sale is referred to as a forward contract. The counter position would be to sell (short) a contract now and buy it back later. This is one way a cattle producer can use hedging to protect their profit margins.
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CUSTOMIZED POLICIES
Enjoy insurance policies that are custom-tailored to meet your operation’s unique needs
YEAR-ROUND SUPPORT
Benefit from year-round access to Ag-Industry experts eager to help manage risk on your ranch
Ranching Expertise
Know you’re working with a team of fellow ranchers, who understand your challenges
MAPPING SOFTWARE
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100
+
Years
Lean on a team with 100+ years of ranching experience dedicated to your operation’s success.
92
%
RENEWAL
Enjoy the same coverage and support that has led to 92% of ranchers renewing their policies year after year.
9.7
/10
Ranches
Entrust your coverage with a team that has received a satisfaction rating of 9.7/10 from insured producers
50
M
ACRES
Make your ranch a part of the 50 million+ acres currently safeguarded with PRF insurance.
PROTECT YOUR PROFITS FROM CATTLE FUTURES MARKET VOLATILITY
Leverage our expertise to weather market volatility
UNIQUE POLICIES
With an LRP policy through Redd Summit Advisors, ranchers are able to insure market prices for their fed and feeder cattle, and unborn calves that haven’t hit the ground yet. And, there is no minimum number of head required to receive coverage.
INDUSTRY EXPERTS
In addition to your LRP insurance policy, you’ll also have the support of industry experts, who closely monitor market conditions, and can let you know when it is the best time to enact your LRP policy and lock in a floor price for your endorsement period.
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HEDGING WITH CATTLE FUTURES
By technical definition, hedging is the use of commodities trading as a tool to lock in a profit margin. In the cattle industry, hedging is a tool that is most commonly used in feedlots.
Typically their hedging strategy operates in 3 steps. First, they’ll inspect the cattle. Then they’ll negotiate the price with the rancher. Finally, when they lock in the price, the feedlot company will then turn around and hedge those cattle as well to lock in their profit margin.
Feedlots aren’t the only sector of the cattle company that can utilize hedging to protect their profits. Ranchers can implement this tool too as part of their risk management strategy.
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HOW CAN RANCHERS USE HEDGING?
Check out these blog posts to read more about cattle futures, hedging, and LRP insurance:
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WHAT IS LRP INSURANCE?
LRP insurance is a USDA-subsidized program that allows livestock producers to “lock in” a floor price for their cattle. If the market price drops below the producer’s floor price during their endorsement period, their LRP policy will trigger an indemnity payment on the difference.
Because of the USDA subsidy, the US Government will cover a portion of your LRP insurance premium. And if your indemnity payment satisfies your premium balance in full, any additional payment will go straight to you with nothing out of your pocket.
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HOW DOES LRP INSURANCE WORK WITH CATTLE FUTURES?
One of the first steps to utilizing your LRP policy is to choose a “floor price” for your livestock based on USDA Agricultural Market Service Expected Ending Price, which is updated almost daily.
Once chosen, your LRP policy covers your livestock up to that floor price. It will issue an indemnity payment if the market declines during your endorsement period, which can last anywhere from 13-52 weeks.
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WHEN THE CATTLE FUTURES MARKET DECLINES
If the cattle market has declined during your endorsement period, you’ll receive an indemnity regardless of whether you sold or retained ownership of your stock. Likewise, if the market price rises above your floor price during your endorsement period, you’ll owe a premium on your policy 30 days after the end of your endorsement period even if you retain ownership of your stock.
Whether or not you sell your stock, and for what price, does not play into your LRP policy at all. LRP insurance is based solely on shifts in the cattle market as reported by the USDA Agricultural Market Service Expected Ending Price.
100
+
Years
Lean on a team with 100+ years of ranching experience dedicated to your operation’s success.
92
%
RENEWAL
Enjoy the same coverage and support that has led to 92% of ranchers renewing their policies year after year.
9.7
/10
RATING
Entrust your coverage with a team that has received a satisfaction rating of 9.7/10 from insured producers
50
M
ACRES
Make your ranch a part of the 50 million+ acres currently safeguarded with PRF insurance.
Cattle Futures
FAQs
Answers to your questions.
You can invest in cattle futures by creating an account with the futures exchange through your broker and depositing the correct margin. Then you can start trading cattle futures contracts.
Cattle prices fluctuate year to year, but February and March are traditionally the best times to sell calves.
You can find Live Cattle (LE) prices on the Nasdaq.
Cattle futures are CTFC-regulated, exchange trade contracts on the Chicago Mercantile Exchange (CME) that enable ranchers to protect their profit margins from declines in the cattle market by selling their livestock on a contractual basis. This means that a producer can sell their livestock at today’s price for their anticipated weight, but physically transfer ownership months down the line.
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WE’D LOVE TO COME SEE YOUR RANCH!
We make regular visits to ranches across the country, we would love to come visit you and show you the benefits of PRF insurance.
Trusted by 800+ ranches & 50 million acres
"PRF Insurance helped maintain our herd size. It even increased a little during dry years."
Dennis W Jones
"PRF through Redd Summit has greatly improved our operation in a short time by balancing cash flow ebbs and flows that were due to dry spells. Redd Summit is great to work with and diligent in answering any questions that we might have."
Jacob Doonan
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