{"id":231730,"date":"2025-10-22T05:48:09","date_gmt":"2025-10-22T05:48:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/231730\/"},"modified":"2025-10-22T05:48:09","modified_gmt":"2025-10-22T05:48:09","slug":"aussie-cattle-markets-becoming-increasingly-volatile-suggests-industry-report","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/231730\/","title":{"rendered":"Aussie cattle markets becoming increasingly volatile, suggests industry report"},"content":{"rendered":"

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Australian livestock producers have been facing an unprecedented period of market volatility over recent years, with swings in cattle and sheep prices reaching record extremes, Rabobank says in new research.<\/p>\n

In the report Managing increased volatility in Australian livestock markets, the bank\u2019s research division says while volatility has long been a feature of livestock markets, both the scale and frequency of price swings have intensified significantly over the past five to ten years.<\/p>\n

And the agribusiness banker believes this high level of volatility is likely to persist in the \u201cshort to medium term.\u201d<\/p>\n

In the past five years, the report says, both cattle and sheep prices have reached repeated record highs \u2013 each exceeding previous peaks by around 20 percent \u2013 only to then fall to the lowest levels seen in the previous decade. Prices have been on another upward trend since 2023.<\/p>\n

Relationship between rainfall and livestock prices<\/p>\n

Report author, RaboResearch senior animal proteins analyst Angus Gidley-Baird said the increased level of volatility seen in Australian livestock markets had not been consistent across other markets, either locally or globally.<\/p>\n

This suggested that while macro geopolitical and economic developments do have an impact, there are particular factors affecting Australian livestock markets which have led to this higher price volatility.<\/p>\n

Mr Gidley-Baird said while there was a clear relationship between rainfall and livestock prices \u2013 with good seasonal conditions driving demand and prices higher, and dry conditions having the opposite effect \u2013 increased price volatility is not simply a reflection of more variable rainfall.<\/p>\n

\u201cWhile rainfall and confidence are important, they don\u2019t account for the magnitude of recent price swings,\u201d he said. \u201cOther factors \u2013 including industry structure, debt levels, and global market dynamics \u2013 are increasingly influential.\u201d<\/p>\n

Contributing factors<\/p>\n

RaboResearch says a combination of these contributing factors are likely behind the extremes in livestock market volatility.<\/p>\n

They include increased exposure to geographically larger markets, growth in information flows, an increasingly unstable global trade environment, changing industry structure and increasing debt levels.<\/p>\n

\u201cAll of these, we believe, contribute to increased volatility,\u201d Mr Gidley-Baird said.<\/p>\n

Geographically larger markets<\/p>\n

The report said in recent years, the Australian livestock sector had become more exposed to geographically larger markets, with the closure of a number of small local saleyards and the increasing presence and throughput of larger regional saleyards, as well as the advent of online sales channels.<\/p>\n

In addition, lotfeeders and processors were no longer just sourcing from local markets, with movement of cattle across state borders a common occurrence.<\/p>\n

\u201cIt is no longer just local, smaller market conditions that influence buyer and seller behaviour, but rather the larger broader market that causes bigger market movements,\u201d the report said.<\/p>\n

Mr Gidley-Baird said greater exposure to a wide selection of information for market participants was also likely contributing to price volatility.<\/p>\n

\u201dWith information and sentiment flowing faster and further than ever before, producers are now reacting to a wider array of signals, from weather forecasts to global trade headlines, which amplifies market movements,\u201d he said.<\/p>\n

The report said an increasingly unstable geopolitical environment, including a general move away from globalisation and trade liberalisation, had contributed more recently to an unstable livestock market.<\/p>\n

\u201cAdded to this \u2018complex\u2019 is a growth in global protein consumption, increased global trade of proteins and the increased presence of diseases, which affect not only production but also trade arrangements,\u201d Mr Gidley-Baird said.<\/p>\n

In addition, the report proposes that the livestock industry has changed in structure, including becoming more \u201cpolarised\u201d with an increasing proportion of livestock numbers in large or small farms and less in medium-sized operations.<\/p>\n

\u201cThis leads to different decision making,\u201d Mr Gidley-Baird said. \u201cSmaller farmers may not be driven by the same profit motives or have access to alternative income streams and larger more corporate-style operations may have different reporting responsibilities and decision-making processes, impacting their participation in the market and possibly adding to more pronounced market movements.\u201d<\/p>\n

He said increased debt levels and financing costs may also be contributing to livestock producers making more dramatic decisions.<\/p>\n

The streamlining of supply chains, particularly for cattle, may also be a contributor to market volatility, the report says, with more livestock now going through private sales \u2013 including direct consignment to feedlots or processors \u2013 reducing the volume and quality sold through saleyards.<\/p>\n

\u201cDue to the more exaggerated supply and demand movements in these saleyard markets, we expect to see greater volatility resulting,\u201d Mr Gidley-Baird said.<\/p>\n

And it was saleyard auction prices which are used for livestock market reporting \u2013 and on which RaboResearch\u2019s report is based, he noted.<\/p>\n

Managing volatility<\/p>\n

While \u201cvolatility is not inherently negative\u201d and \u201csimply represents risk, and potentially opportunities,\u201d it is likely to persist in the Australian livestock sectors for the short to medium term, the report said.<\/p>\n

And industry participants should at least prepare to manage it.<\/p>\n

\u201cThis requires a strategic approach that reinforces adaptability, promotes resilience and improves predictability,\u201d Mr Gidley-Baird said.<\/p>\n

\u201cThere is a renewed case for embedding resilience and predictability into business planning, which can help producers navigate uncertainty with greater confidence and avoid reactive decisions that may carry long-term consequences.\u201d<\/p>\n

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Source: Rabo<\/p>\n

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