Australia: Numbers crunched on a cattle swap through the market plummet and rise

Cattle swaps are increasingly being looked at as a tool to manage price risk against a backdrop of divided expert opinion on where the herd is headed size-wise and what that will mean for the market. Analysts have made the point this year that the cattle market has been the most volatile since records began. Quarter one 2024 has seen the largest price increase in the Eastern Young Cattle Indicator on a quarterly basis since 2000 but the quarter before it saw the largest decrease in that period. A swap is a financial derivative where producers are able to lock in a future price for cattle. Ripley Atkinson, livestock and commodities manager with StoneX, which offers a feeder cattle swap that settles against the northern feeder cattle index published by Argus Media, has run analysis on utilising the swap in the falling market of 2023, and also in the rising market that is following. The analysis was based on actual prices in 2023 from May to October on a six-month trade for flatback ...