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Livestock Gross Margin: A Risk Management Tool for Cattle Feeders

Ron Hook (May, 2006)

Summary

Livestock Gross Margin (LGM) is a livestock insurance product that protects an expected gross margin (EGM) rather than a selling price, as is the case with Livestock Risk Protection (LRP). LGM and LRP allow for numbers of cattle to be protected that do not match the specifications of the CME contracts, thus eliminating over or under coverage.