February 26, 2012
AUSTRALIA’S largest cattle company will host a forum in Brisbane on Thursday to explore new price risk management options for the global beef industry. The meeting, which is expected to draw large numbers from across beef’s supply chain, is the next phase in Australian Agricultural Co’s (AAco) concerted international push to establish a new beef futures market as a tool for beef producers and a growing fast food service sector worldwide to better manage the risk of volatile beef prices. The meeting will feature presentations from Tim Andriesen and Nelson Low from the Chicago-based CME Group, the world’s leading and most diverse derivatives marketplace. AAco managing director David Farley said the two Americans were visiting key Australian beef players this week to discuss potential risk management solutions for the global livestock market. “One possibility is the listing of an exchange traded boneless beef futures contract to complement a suite of other livestock and meat protein products currently offered by the CME Group,” he said. “In addition, Scott Hansen, managing director of Meat & Livestock Australia will present on the opportunity a boneless beef futures market presents for Australian producers and processors and how the market has changed since this was last attempted.” Mr Farley has been publicly pushing the benefits of a beef futures market since late last year, advocating the time and the trading environment for ground beef was right to create a successful futures contract. Uppermost, he said, was the challenges beef producers faced in the US with more price volatility on the back of lingering drought resulting in higher slaughter rates and the ongoing liquidation of the US herd. Australia’s share of the US ground beef market is also set to continue this year, according to MLA research. “In 2010, global beef production amounted to 57,000,000 metric tonnes of which about 25 per cent was ground beef or used for manufacturing purposes,” Mr Farley said last year.