Jan. 02/19 Articles Print Page

All commodities, not just the North American cattle market, have experienced uncertainty and volatility as a result of recent trade negotiations, tariff impacts and political uncertainty. This has been exhibited in an increased appetite to manage risk among owners of these affected commodities, specifically cattle, hog, and grain producers.

As WLPIP moves into the Calf Insurance sales season, producers will see continual changes in coverage and corresponding premiums on the premium tables offered as a result of above mentioned risks as markets in the U.S. respond to revelations in real time. Also, what needs to be kept in mind is that since coverage and premiums have not been published for WLPIP-Calf since last May, the scale of changes in market prices should be taken into account.

Specifically affecting Alberta cattle producers is the U.S. nearing the end of their expansion phase, bringing up production year-over-year by three per cent south of the border. Compounded with other meats like pork and chicken showing large outputs, the real unknown for 2019 will be how well domestic demand and export strength can lend support to market prices.

On a positive note, the Canadian dollar, being one of the three WLPIP coverage forecasting components, has moved in the industry’s favour recently. A declining Canadian dollar means higher coverage offered for WLPIP-Calf in this new sales season.

When to purchase

Regular monitoring of WLPIP coverage is a good strategy since daily changes in exchange rates, futures markets and feed prices all contribute to calf price risk, volatility, and ultimately, the insurance being offered. Producers are encouraged to continue to watch the calf premium tables throughout the sales season and make their purchases when it makes the most sense to them.

Some points to consider while making a purchasing decision are:

  • Cattle owners are reminded that they do not need to purchase coverage on all of their production, nor do they need to purchase all of the insurance at once.
  • Choosing the most beneficial coverage and corresponding premium is up to the producer; purchasing at a lower coverage with a lower premium may be advantageous depending on the situation.

WLPIP is not a margin insurance program, and as coverage rises and falls according to the market, there is no guarantee of the ability to insure for a profit. It is recommended that all producers evaluate the whole range of coverage levels being offered and determine the best level for their own risk tolerance.

A key factor to knowing what coverage level (and cost of premium) will be a good fit for each individual/operation is to figure out the operation’s unit cost of production. One tool to calculate this is Alberta Agriculture and Forestry’s calculator called: Ranchers Return Lite which is available at www1.agric.gov.ab.ca.

For any questions, producers should visit their local AFSC office or call Client Contact Centre at 1.877.899.2372, or visit www.wlpip.ca.

Western Livestock Price Insurance Program (WLPIP) protects producers against unforeseen declines in market prices for calves, feeder cattle and fed cattle.
Opening again soon is the WLPIP – Calf program specifically tailored for producers calving this winter/spring to sell calves in the fall. WLPIP uses both current and historical market information to forecast the price of calves in Alberta from September through December in 16 to 36 week policy lengths. The 2019 WLPIP-Calf sales season will run from Tuesday, February 5th through to Thursday, May 30th. Producers are able to purchase insurance Tuesday, Wednesday and Thursday from 2 to 5:30 p.m. (MT).