Meat outlook better than expected

The best news since Christmas was Meat & Wool Economic Service’s (MWES) forecast of strong increases for lamb and beef this season which reinforces what exporters have cautiously been saying about the market outlook.

Fonterra not in control of global strategy

After several years of uninterrupted success in building a dominant dairy trading business, Fonterra hit a series of icebergs during 2008. The problems have been well documented – SanLu, abandoned capital restructuring plans, tumbling commodity prices, lower payout forecasts, questions about the online auction system – and the impression is one of loss of control of the long term direction of the business.

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Livestock contracts risky by definition

The decision by Silver Fern Farms (SFF) to exercise its right not to sign about 100 Backbone beef contracts is understandable, if unwelcome, confirmation of the inherently risky nature of market linked livestock contracts. The principle is fine – advance commitment of stock from suppliers willing to work with one company and take the chance the contracted price will be better than the spot market price – but in practice it only works when the movements in price are relatively small and predictable.