MLA Managing Director Richard Brooks said the listing of a Cattle Futures contract in Australia could provide a valuable and effective hedging mechanism for beef producers, processors, wholesalers and buyers to help manage price uncertainty and risk.
"The introduction of Cattle Futures to the Australian market will enable the industry to lock in prices for longer periods of time, help improve budgeting and help investment planning," Mr Brooks said.
Mr Brooks also thanked Elders, Wesfarmers, Mort and Co and Rabobank for providing industry sponsorship for the listing.
The MLA/ SFE Cattle Futures contract will be listed as a cash-settled contract. The contract unit will be 5,000 kilograms of dressed weight equivalent of young cattle settled against the Eastern Young Cattle Indicator (EYCI). Trading will be available in both the day and overnight trading sessions, in contract months January, March, May, July, September and November, out eighteen months.
The Indicator is based on a seven-day rolling and weighted average of young cattle sales in 26 major cattle auction centres spread over Queensland, New South Wales and Victoria covering 16 separate young cattle categories, as reported by the National Livestock Reporting Service (NLRS), a division of the MLA.
"We are delighted by both the launch of the new service and our partnership with Meat and Livestock Australia," said Mr Peter Hiom, General Manager of Strategy and Business Development at the SFE.
"By combining the market position and reputation of MLA, and the trading, clearing and exchange management services provided by SFE, we are confident the market will support the new contract."
MLA will be holding a series of price risk management forums across Australia to raise awareness about the Cattle Futures contract. In addition, price risk management courses are being conducted by an independent agency. MLA have also constructed a website for those interested in the Cattle Futures contract. At www.cattlefutures.com.au users are able to view marketing materials on the contract including contract specifications along with guides on the use of the contract and the Indicator. Alternatively, MLA can be contacted on 1800 023 100.
Meat & Livestock Australia Ltd (MLA) undertakes a range of research and development, information and marketing programs, designed specifically to benefit meat and livestock producers, processors, exporters, and retailers. The company also manages strategic planning for the cattle, sheep and goat industries. MLA is funded through cattle, sheep and goat producer levies, joint funding from the processing and live export sectors and, in the research and development area, through Federal Government dollar for dollar matching funds.
SFE Corporation Limited (SFE) is a provider of exchange-traded and over-the-counter financial services for institutional investors globally. Fully electronic and with 24-hour trading capability, SFE offers trading products for investment and risk management and disseminates market data and information. SFE Clearing is the fully owned clearing and settlement arm of SFE Corporation Limited, and provides central counterparty clearing, central securities depository and cash settlement services. www.sfe.com.au
