The Country 15/10/25: Angus Gidley-Baird talks to Hamish McKay

Rabobank’s Sydney-based senior analyst discusses the bank's latest report on managing increased volatility in the Australian livestock market.

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Episode Transcript

Speaker 1 (00:00):
Well, of course we know it is boom times in
terms of farm gate prices on this side of the
Tasman and the other side of the Tasman as well,
and I think in many respects we do to a
certain degree go hand in hand. So what does it
all mean. There's a new report coming out from RABO
Research around of volatility, so we'll find out a bit

(00:22):
more about this. We're going to cross to Sydney to
Angus Gidley Beard, who is the senior analyst animal protein
for RABO Research. Hello there, Angus, how are.

Speaker 2 (00:32):
You very well? Thanks Hamish yourself?

Speaker 1 (00:35):
Yeah, great, thank you great. So this new report about
to come out give us the details on this managing
increased volatility in the Australian livestock markets, which are no
doubt have a lot of great information for both sides
of the Tasman.

Speaker 2 (00:48):
Yeah, definitely, And I mean we share a lot of
commonalities obviously, big beef exporters and big lamb exporters in
the US being a key market for both of us
in China as well, and also there's a lot of
similarities with it. But the real thing that sort of
prompted me was looking predominantly we're looking at the Australian
market as a starting point and just seeing how much

(01:10):
prices have moved over the last twenty years, even going
back further than that, looking at the last fifty years,
but you can see that the nominal price movements are
getting bigger. So our highs are higher and our lows, well,
our low we're seeing a bigger contraction, even though they're
not going to the lowest of lows, but you know,
we're seeing a much bigger drop in prices. And in Australia,

(01:33):
for example, we saw our feetest year price back in
the two thousand to two thousand and four period, there
was about a three dollars sixty nine variation between the
high and the low. That's about a thirty one percent difference.
In twenty twenty to twenty twenty four, we actually saw
that oh sorry, it was forty seven percent change back

(01:53):
in twenty two thousand to two thousand and four, and
it changed to a three dollars seventy change in twenty
twenty to twenty twenty four. So it was a thirty
percent difference back in two thousand and one hundred and
eighty percent difference in twenty twenty to twenty twenty four,
So an increasing movement between the highs and the lows,
and I see something similar in New Zealand as well,
probably not as evident in your land markets. You did

(02:14):
have a big jump back in twenty ten twenty eleven
where we saw lamb prices jump about four dollars top
to eight dollars. That's probably a similar sort of jump
to what you've seen more recently with the lamb price.
I think it's gone from about six dollars to must
be about eleven dollars close to eleven dollars now in
New Zealand. But the cattle market's done something similar. It's
sort of increased in terms of the peaks and the lows.

(02:36):
So I just wanted to try and find out is
is there something driving that. If there is, you know,
does that give us a better ability to forecast if
it's going to see higher highs and big drops again,
or is it just something that we're going to have
to learn to live with and that becomes part of
our business.

Speaker 1 (02:53):
So as volatility something we've got to learn to live with,
or can we sort of move and shake and make
some futuristic decisions.

Speaker 2 (03:00):
Yeah, well that was it. I mean, I was hoping
when I set out on this old process was to
find a couple of key things that you could sort
of really clearly pinpoint as being a key influence. Seasonal
conditions are obviously one, producer sentiment is another, and that
they definitely have an impact on price direction, but they
don't necessarily give you an idea of quantum of movement.

(03:22):
So in Australia, for example, we've seen greater variation in
seasonal fluxshot variability over the last twenty five years than
what we've seen in the last sort of five years,
So it doesn't necessarily dictate how much the prices are
going to move up or down. So there's a whole
lot of other things that go in there. When talking
to people and doing the research for the whole for

(03:45):
the report, you know, we found a couple of things
that seem to be fairly common. Our markets are getting
bigger from an Australian point of view. Now we've got
a lot of online trading, We've got cattle trading between
all the different states all over the place, so it's
not just your local sailure anymore. We've got a lot
more information available to us, much wider information sources, and

(04:06):
potentially some of those are possibly a little bit more
sensationalist than some of the commentary. I've got all the
things going on in the global macro space with politics
and deglobalization, et cetera. That's having a big impact at
the moment, and depending on political persuasions, that's possibly something
that might be a little bit more shorter term. But

(04:28):
a number of other things are sort of structural as well.
So we think, or I think anyway that, yeah, we
should probably prepare for the fact that volatility is going
to be with it now. Volatility is not always a
bad thing. There are opportunities in volatility, definitely, but it's
just being able to plan for those that becomes the challenge.

Speaker 1 (04:47):
Yeah. Absolutely. I guess it's all about strategy. It's all
about strategy and resilience and being able to what It
became the big word, didn't it during COVID have been
able to pivot?

Speaker 2 (04:57):
Yes? Yeah, yeah, that was I don't think that in
almost every report. Wasn't it being able to do so? Yeah? Yeah,
being adaptable? That was the big thing with COVID, wasn't
it being able to adapt and change markets? That's a
key thing, but resilience as well. Resilience I think more
in the case of New Zealand produces be exactly the
same too. You know, there's already a degree of resilience

(05:19):
in prim re production anyway, but it's probably just understanding that,
you know, if we're going to have these higher highs
and possibly bigger drops than that resilience, you just need
to dial that resilience in a bit more. Might mean
that you need to have maybe better fodder reserves. Maybe
it's that you've got your own own farm or personal
mental position in terms of resilience as well being able

(05:40):
to handle some of those extremes in either direction. The
other one also is just sort of looking at predictability.
It's a bit sort of strange talking about predictability and
a report that talks about volatility, but probably more so
around your business and how you can create some predictability
in your business. How's your busin that's going to respond

(06:00):
if the market does this, What are your key decision
making points? What are the key decisions that you're going
to do so that you can you can get some
certainty in that and plan how you respond to things
rather than being I suppose I had the whim of
the market and trying to make on the on the
rhyme decisions, trying to pick highs and picklows and those
sorts of things, because yeah, that's probably going to be

(06:22):
a lot harder as volatility continues to be present.

Speaker 1 (06:25):
When does research the report going to be out, Angus,
Is that.

Speaker 2 (06:27):
Far away or no, it's not far away. It's just
in the process of being finalized at the moment. I
probably stay safe and it'll be out next week. So yeah,
that'll be available through the Ravo Research website.

Speaker 1 (06:37):
Fantastic, much appreciated, Angus. We'll talk again soon. That is,
Angus could be bid out of Sydney's senior analyst animal
protein for Ravo Research Ravo Bank here on the country