It’s all about the Covid-19 outbreak at the moment, with all the talk centred on the impact. This week it has been a surprise rise in grain prices and a dramatic drop in finished cattle prices which has taken our interest. Obviously these market movements are bad news for lotfeeders.
Last week we ran some forecast scenarios for the ESTLI based on a Covid-19 inspired impact on global growth. This analysis follows up in a similar theme, looking at what a global financial style cut to the economic growth of our key trading partners would do to the National Mutton Indicator.
Last week the Australian dollar dropped by over 4 cents in one day against the US dollar, a classic reaction to turbulent events around the world. This was the second largest one day fall in the Australian dollar since it was partially floated in the early 1980s. The lower exchange is helping to cushion the down cycle in wool prices seen since 2018.
The wheat market is firing on all cylinders are present with futures and FX moving in the right direction. This has provided opportunities for farmers to lock in strong prices for next year. In this update, we look at whether this should be as futures (or swap) or physical.
The female slaughter ratio (FSR) is a key cattle market indicator that tells us what is happening to the herd with regard to liquidation or rebuild. The January figures were released this month and it shows we are still very much in a destocking phase, but this may change as the restocking activity seen in during February/March starts to show up in the data.
Kansas typically trades at a premium to Chicago. However since 2018 Chicago has been running at a strong premium. In September we put forward a strategy for a spread trade to benefit from a mean reversal in values.
Wool growers are the natural sellers (forward selling to hedge) in a forward wool market. Ideally this selling pressure is balanced over time with buyers drawn from greasy traders and early stage processors, with speculators joining in to boost liquidity. This article takes a look at the balance seen between sellers and buyers in the forward wool markets in recent decades.
The Black Swan that is Covid 19 is playing havoc with all markets, but it is the local livestock markets are interested in. Compared to some, red meat has been relatively well spared, with recent rain and lack of stock providing a buffer. We have seen some panic, and its causing a wide spread between the lamb categories.
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