The next Livestock Gross Margin-Dairy (LGM-Dairy) sales period begins Friday afternoon, Jan. 31, and ends on Feb. 1, according to Alan Zepp, Risk Management Program coordinator with Pennsylvania’s Center for Dairy Excellence. LGM-Dairy will be offered for sale by crop insurance agents, with producers eligible to purchase margin insurance for a 10-month period (March-December 2014), or any combination of months during that period.
The March-December 2014 average of expected margins is $15.93/cwt., about $2.50 (16%) above the 3-year actual average for the same period of $13.46/cwt.; about $3.70 above the 5-year average actual margin of $12.24/cwt.; and $3.20 (20%) above the 10-year actual average of $12.73/cwt.
The premium for a $0 deductible policy to insure a $15.93/cwt. margin is estimated at 61¢/cwt. (17¢/cwt. to insure a $14.93/cwt. margin for a $1 deductible policy). Even the $1 deductible policy insures a margin above the 3-, 5- and 10-year average actual margin, Zepp noted.
Historically, Wisconsin dairy producers have been most active in utilizing LGM-Dairy in terms of milk volume covered, with 3%-4% of its total milk production insured. California producers are second in total sales, but insure margins on only a little over 1% of their total production. Michigan and Minnesota follow in totals sales, although more than 4% of their total milk production was insured. New York and Pennsylvania producers have protected margins on about 2% of their overall production through LGM-Dairy.
“Protecting Your Profits” information and a recorded podcast are posted at http://centerfordairyexcellence.org/protecting-your-profits/. The website also adjusts LGM-Dairy estimated margins weekly, based on updated futures prices.
Zepp’s next call/webinar will be Feb. 26, providing information for the Feb. 28-March 1 LGM-Dairy sales period. For further information, producers can contact him at firstname.lastname@example.org or phone 717-346-0849.