Lower Aussie dollar aids farmers

10 Jul, 2015 06:21 AM
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West Australian grazier Mathew Preston.
If we had an alternate five years ago, we probably wouldn't still be in cattle
West Australian grazier Mathew Preston.

WEST Australian grazier Mathew Preston says he needs the high beef-cattle price to sustain its run for at least the next several months, to cash in on the latest spike in prices and plunging Australian dollar.

The 46-year-old farmer, who resides north of Perth in Bindoon, predominantly sells his stock to feedlots in the summer months.

"I haven't sold into this market; we'll see if it holds. Is it sustainable?" Mr Preston said. "If it's a flash in the pan, people will get burnt."

Many farmers are benefiting from high livestock prices, aided by a falling Australian dollar that is at a six-year low. The price spike, which also relies on strong demand in America and Asia, follows a sustained period of weakness.

Beef production in rival jurisdictions, such as America, is also subdued, giving Australian producers the chance to pounce to make the most of conditions.

Mr Preston said there was still some nervousness in the industry, with futures contracts still modestly priced, and he said no one was knocking on his door offering to buy his farm at above-market value.

"At the moment all the ducks are lining up," he said. "But it's come off a low base. Five years ago, we were working 10 hours a day and getting paltry amounts. It was like we were working for free. Our country dictates it's a grazing enterprise - it's either sheep or cattle. If we had an alternate five years ago, we probably wouldn't still be in cattle."

With cattle prices in some areas exceeding $5 a kilogram, the export-focused cattle industry is increasing supply which should ultimately temper cattle price rises.

But for the moment, primary producers across the agricultural sector are welcoming the fall in the Australian dollar. For years they have watched their exports and profits squeezed by a strong currency which was parked for a significant period of time above parity with the US greenback.

AgForce chief executive Charles Burke, who represents beef, sheep and grain producers in Queensland, said farmers and graziers were finally reaping the benefits of a lower currency. It used to cost producers $190 million for every one per cent increase in the Australian dollar against the US currency.

"Now, in the reverse, every time the dollar depreciates it does have a tangible impact; it's certainly helping," Mr Burke said.

He said the beef industry in Queensland was also benefiting, with a surge in demand combined with a lower dollar. At the Roma salesyard on Monday a record price of "$5 on the hooks" or $3.46 a kilogram (live weight) was achieved, which Mr Burke said was "unheard of".

National Farmers' Federation president Brent Finlay, who runs a sheep and cattle station near Warwick, south-west of Brisbane, said with 60 per cent of agricultural products in Australia exported every year, the outlook for the sector was positive.

"The lower the dollar, the better it is for us; there are a few clouds on the horizon with China and Greece, but the outlook for the agricultural sector is the best it's been for years," he said.

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READER COMMENTS

Rob Moore
10/07/2015 7:06:32 AM

What sort of sloppy double talk kind of statement is THIS? "With cattle prices in some areas exceeding $5 a kilogram, the export-focused cattle industry is increasing supply which should ultimately temper cattle price rises." The $5 /kg is deadweight and feeder steers @350 kg just cracked $8.01 c/kg LIVE into US feedlots. This is the usuall -Talk it down to "us" mushrooms " that grow cattle in Oz..High $,low $- unless we get true competition- meat owners will cont to pay us crumbs - BUT Mathew - these prices plus a lot more ARE here to stay!SUPPLY certainly isn't increasing-people take the $

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