Livestock Gross Margin Insurance Policy provides protection against the loss of gross margin (market value of livestock minus feeder cattle and feed costs) on cattle. The indemnity at the end of the 11-month insurance period is the difference, if positive, between the gross margin guarantee and the actual gross margin. The LGM-Cattle Insurance Policy uses futures prices to determine the expected gross margin and the actual gross margin. Prices for LGM-Cattle are based on simple averages of Chicago Mercantile Exchange Group futures contract daily settlement prices and are not based on the prices you receive at the market.
Livestock Gross Margin – Cattle | RMA (usda.gov) – FAQ
Livestock Gross Margin Insurance Cattle | RMA (usda.gov) – Fact Sheet