WLPIP
- Thread starter Silver
- Start date
Big Muddy rancher
Well-known member
I enrolled my yearlings this year. Still not sure I quite understand the program completely. :? 
Big Muddy rancher said:I enrolled my yearlings this year. Still not sure I quite understand the program completely. :?
I've been digging into it lately, and while I may well still be confused, I think it's actually fairly simple. I think a person has to come to the realization that we aren't insuring our cattle per se, but insuring the market.
Big Muddy rancher
Well-known member
Silver said:Big Muddy rancher said:I enrolled my yearlings this year. Still not sure I quite understand the program completely. :?
I've been digging into it lately, and while I may well still be confused, I think it's actually fairly simple. I think a person has to come to the realization that we aren't insuring our cattle per se, but insuring the market.
Yes, I figured out the weight of my yearlings in total pounds divided by 100. I was then able to buy insurance on so many 100lb lots.
The day I bought was the highest premiums and I see the price you can insure for went up so I would read the market looks to be moving up. I guess the best scenario would be to buy it and not need it because the market was higher.
bearvalley
Well-known member
WLPIP is going to be a great tool to add stability to the calf, yearling or feeder marketplace. At least any drops in value are corrected on the cattle affected by sudden market disruptions. With today's yearling prices anyone not forward contracting or using WLPIP would also probably be inclined to liking to play Russian roulette. Makes sense to me to cover calves at at least a break even value as well. The BSE fiasco is still a memory.
We have used WLPIP here. It is an easy way to hedge against the $, the basis and the futures market. I like it because it is simple, doesn't require a hedge account or margin calls and is pretty straightforward. I also like the fact that you don't need to sell the cattle to get paid.
Basically is the premium is $2 for $2 coverage it means you pay $2 for each 100# increment that guarantees you a price of $2 per pound. If the survey price at the auctions or plants is higher on your maturity date you don't get paid, if it is lower, you get paid the difference. If you insured 100# at $2 and the price was $1.80 at maturity, you would get a cheque for $20 ($0.20 x 100#)
It is pretty good and low cost coverage. I see issues coming down the road as more good quality cattle are traded privately or on contract, that the settlement prices based on auction or cash trade may not reflect the true price received on quality cattle.
Basically is the premium is $2 for $2 coverage it means you pay $2 for each 100# increment that guarantees you a price of $2 per pound. If the survey price at the auctions or plants is higher on your maturity date you don't get paid, if it is lower, you get paid the difference. If you insured 100# at $2 and the price was $1.80 at maturity, you would get a cheque for $20 ($0.20 x 100#)
It is pretty good and low cost coverage. I see issues coming down the road as more good quality cattle are traded privately or on contract, that the settlement prices based on auction or cash trade may not reflect the true price received on quality cattle.