In the past two weeks the futures market and a strengthening Aussie dollar have provided some headwinds to grain prices, but overall, they are holding up well. In this analysis, we contemplate what basis is, and why it is important to understand.
Updated half yearly live export flows show Kuwait has regained top spot as the destination for Australian consignments of mutton on the back of solid flows during April. Kuwait managing to return to the number one position despite a steady lift in Qatari demand for live sheep, as the increased foreign workforce brought in to construct stadiums needed for the 2022 Soccer World Cup impact upon the nation’s protein intake.
Meat and Livestock Australia (MLA) rarely weigh in on price forecasts, preferring to leave the dark arts of crystal ball gazing to the likes of Mecardo. Last week MLA did, however, strongly suggest that cattle prices were going to continue to wane, and it’s hard to argue if you consider their supply forecasts.
When we set out to write this article, we thought it was going to be about how restocker demand was on the wane, and one of the reasons the cattle market was falling. While restockers are paying less, they are still buying plenty of cattle.
Above average cattle throughput, on the back of a drier than normal June, has resulted in some softening of saleyard prices. This has provided some support to the processing sector during a time in the season that normally experiences a tightening of processor margins.
The Australian grain market is export dominated, however on the east coast the domestic market can be the real driver. A couple of weeks ago we looked at the demand for grain in the cattle feedlot sector, this analysis will look at the pork industry and give demand projections for this year.
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