Flood-drought cycles inspire launch of Argus Australian cattle price index

Sydney, 3 December 2021

Global energy and commodity price reporting agency Argus has expanded into livestock pricing with the launch of its weekly Australia northern feeder cattle index. The price has been developed in close consultation with industry participants and responds to growing demand for more transparency and risk management tools in this volatile market.

Australia is the world’s second-largest exporter of beef. Drought in 2017-19 resulted in cattle prices plummeting, as farmers were forced to sell cattle that they could not feed or water. Prices have more than doubled since the start of 2020 after the return of widespread rain. Such increasingly volatile weather events are driving a correspondingly urgent need for market participants to be able to hedge risk and manage margins.

Argus has worked with numerous companies in the eastern Australian cattle market to develop the northern feeder cattle index, based on transactions between farmers and feedlots within a 300km radius of Dalby in the heart of the country’s major cattle region the Darling Downs. The industry can either use the index in contracts directly or price other related cattle markets at a differential.

“The Australian cattle market is increasingly looking to manage its margins in the face of significant weather-related challenges. The Argus index provides the industry with a much-needed settlement mechanism for derivatives,” Argus Media chairman and chief executive Adrian Binks said. “Our move into livestock pricing complements our expansion last year into the global grains and oilseeds markets, whilst drawing on synergies with our biofuels coverage in markets such as beef tallow.”