Matt Costello, Rabo AgriFinance

(Jamie) Thanks for staying with us. Now let’s join Kyle and Matthew.
(Kyle) Hi this is Kyle Bauer in San Diego, have the opportunity to visit with Matt Costello. He’s with Rabo AgriFinance. And he’s from Australia, New Zealand, works in the beef industry there, an analyst for the industry. Your area has had the drought that we have been fighting in this country. (Matt) Yes, absolutely. We’ve definitely probably following ship if you like, or the direction that the U.S. industry’s gone through. We’ve had very, very challenging drought conditions throughout key cattle regions. We’ve gone through the heavy liquidation of cattle. We’re now at the point where rebuilding has to happen. Not necessarily because of improved seasonal conditions but just because we have depleted our cattle supply so much. (Kyle) Well, exports are a large part of the U.S. production but in Australia it’s imperative. (Matt) Absolutely. We don’t have the domestic market that the U.S. does. We just don’t have the consumer base there. So Australia exports roughly 70 percent of what they produce whether it be box beef or live trade. New Zealand is as high as 90 percent. So, we need to be proactive in looking out at these export markets. So, the one positive we have seen with very, very high beef production has been record export. So, that has certainly helped ease a lot of the challenges. It’s certainly meant we’ve found home for our beef and a lot of that has had to do with the U.S. rebuilding their herd. So that lean beef supply that we’ve had coming out in record volumes that’s been fantastic timing that the American industry’s needed that as well. (Kyle) But part of that has also come from a strong dollar. Does the dollar affect your market or are you pretty much in a completely different market than the U.S. is? (Matt) Well the currency declined a huge amount in the last two or three years as the Australian economy started to slow and the opposite has happened with the U.S. economy improving. So, what we’ve seen is the currency now around 70 cents versus the U.S. or there abouts. So, from an exporting perspective that’s certainly helped cushion in Australian dollar terms process and certainly helped support prices and made us more competitive on the international export market. (Kyle) Is the drought continent or nationwide for Australia? (Matt) I think in Australia you just get used to farming in very difficult conditions. But what we have seen is the drought in the last three years has been particularly severe in Queensland and northern as well, so they’re getting towards the more northern states and that largely has been a three year story. Not much rainfall, very limited grass. So, producers unfortunately for a lot of them have had no choice but to sell stock at very low prices. (Kyle) We’re visiting with Matt Costello. He’s with Rabo AgriFinance. This is Kyle Bauer reporting. Back to you Jamie.
(Jamie) Don’t go away, next Kyle catches up with Craig Uden Vice President of NCBA.

No Comments Yet.

Leave a reply

You must be logged in to post a comment.