When cattle markets are strong—as they are today—it’s easy to feel like risk management is unnecessary. Optimism is contagious, and cattlemen have earned the right to feel good when prices are high. But history, and behavioral science, remind us that decisions made during times of strong sentiment can be short-sighted. That’s why Livestock Risk Protection (LRP) should still be part of the conversation—especially now.
I want to be clear, I’m not saying the cattle market is headed south. In fact, I think the fundamentals support continued strength. But that’s exactly why this is a smart time to think about protecting your operation. LRP allows you to lock in a floor price without capping your upside. In other words, you can stay optimistic about the market and still protect your bottom line.
A strong market offers more opportunity—but also more to lose if things change unexpectedly. Feed costs, consumer demand, exports, weather events, and macroeconomic shifts can all impact the market, and they often hit when we least expect them.
With today’s market I would tell producers to maximize LRP’s potential by considering two strategies that make sense with today’s market.
- Short-Term LRP to Get You to Market
If you plan to market your cattle in the next few months—say midsummer—consider a short-term LRP endorsement. This provides coverage to get you through to sale day, especially if you’re planning to take them to auction or a video sale. Just remember: if you don’t sell the cattle at that time, you’ll need proof of ownership to be eligible for an indemnity. A weigh ticket or scale sheet with your name on it can work, but plan ahead to make sure you’re covered as it can be a little more challenging this time of year. - Longer-Term LRP for Flexibility Through Fall
Alternatively, some producers are buying longer-term LRP endorsements into the late fall. This gives them the ability to watch the cash market and make the decision to sell when it’s most favorable. You’ve got flexibility to wait and strike when the price is right. But there’s a critical detail here: if you load the cattle on the truck more than 60 days before the end of your LRP endorsement, the coverage is void—unless you transfer ownership to the buyer. That’s an important nuance to remember as you plan.
In the end, LRP isn’t about predicting the market—it’s about creating stability in a business that has more than its fair share of volatility. Strong markets are a blessing, but they don’t mean risk has disappeared. They just give you a better starting point for protecting the value you’ve worked hard to create.
If you’d like to talk through options or tailor an LRP plan to your operation, the team at Ranchers Insurance would be glad to help. Because good cattle prices are worth protecting.
About the Author: From 2013-2017 Brandon Willis oversaw USDA’s insurance programs as the Administrator of the Risk Management Agency. Prior to that, he served as a Senior Advisor to the U.S. Secretary of Agriculture Tom Vilsack. He owns Ranchers Insurance LLC, an insurance agency that specializes in livestock insurance. He can be reached at brandon@ranchersinsurance.com.