AT the Sale Polocrosse Club in Fulham on Monday evening, Rabobank Sale held an exclusive forum on the RaboTruck, a multipurpose vehicle designed for sharing knowledge and building networks.
The local Rabobank team and clients were joined by Senior Animal Protein Analyst, Angus Gidley-Baird; and Senior Dairy and Consumer Food Analyst Michael Harvey.
Mr Gidley-Baird spoke about the outlook for livestock prices and Mr Harvey discussed global market volatility.
Speaking to the Gippsland Times in the hours before his presentation, Mr Harvey said a weaker global market would have an impact on farmgate prices that clients would need to be mindful of.
“What we’ve seen is a sizable drop in commodity prices. Depending on the commodity, you’ve got the global markets back on the five-year average,” he said.
“What everyone’s looking to now is what’s going to be the new (farmgate milk pricing) for the upcoming season. It gets underway from July 1, but there will be price signals in the market in the lead-up to that, particularly on June 1 when prices are set…factoring in the Aussie dollar and what happens with the domestic market.”
“A lot can happen between now and July. Prepare for potentially a slight fall in the farmgate price, and factor that into your budgeting plan.”
Mr Harvey said that despite volatility in the market, prices will support profitability.
“With the global markets, the farmgate pricing will be quite elevated…so we still think it’s going to be a good year, but we’re cautioning that we don’t think the milk prices are going to go higher, they may come off a little bit,” he said.
“All of Australia has got record high farmgate pricing, and that’s a key driver of profitability.
“There’s plenty of feed around. For irrigation farmers there’s going to be plenty of irrigation water around. The cost of fertiliser has come back, so that will protect margins.
“Interest rates are getting higher, so it’s a mixed bag when it comes to costs.”
In his presentation, Mr Gidley-Bair spoke about livestock prices, which has gone down since the highs of last year.
The question he wanted to answer during his presentation was whether the livestock party was over, and was a hangover imminent?
“Livestock prices have come off quite a lot since the highs of last year. Yes, the party is over, but the hangover is not going to be very bad,” he told the Gippsland Times.
While the cattle and sheep markets have gone down quite substantially since last year, they’re still quite high.
Mr Gidley-Bair said he was expecting a “normal” or “average” year for livestock prices overall.
“Where we sit at the moment from a market’s point of view is a growth in supply. So sheep and cattle numbers are increasing,” he said.
“There are some question marks over processing capacity and labour availability, and whether or not they can accommodate those numbers, but I think we probably can. There’s also the geopolitical tensions that exist in global trade markets.”
“From an outlook point of view, it’s still very positive, including with the Australia-China relationship.”
