Livestock Risk Protection (LRP) usage has been off to a strong start in 2023 and will likely remain solid as we continue to see high cattle prices. Currently, the spread between the futures prices and the actual cash market is roughly $30 giving producers a good opportunity to cover profit margins. As we move into the second half of the year, RMA has made two significant changes to the LRP program.
Starting July 1, 2023 the new LRP sales period will be changed from ending 9 a.m. to ending 8:25 a.m. This is an important change to note when you are wanting to purchase a contract. It is essential that you contact your agent or our office no later than 8 a.m. to ensure we have time to enter the contract prior to sales being shut off at 8:25 a.m.
Another new change starting on July 1 will be how the fed cattle weekly ending value number is calculated. Previously the number used the 5 Area Weekly Weighted Average Direct Slaughter Cattle 35-65% Choice. It will now be settled against the over 80% Choice price series. This new ending price calculation will only be used for contracts purchased after July 1.
While these changes seem minimal, they will have a significant impact on how the LRP product will function. As we move on into the second half of the year, we encourage all livestock producers to take a look at how LRP can benefit your operation. Visit our website homepage to use our LRP calculator to see how LRP can help protect your profit margin. If you have any questions about these changes or purchasing LRP, please call our office.