Managing seasonal risks
Market report for 17th and 18th May 2017 Wednesday Fat Sale 325 head. Thursday Bull and Cow Sale, 19 bulls, 484 cows
Heavier weights this week in the vealer and steer sections of the fat sale saw a rise for vendors in the average price per head. As steers averaged a good $146 better and vealers $100 better. Heifer weights were lighter but with the average price higher they averaged similar to last sale. Steers averaged heavier but eased in the average cents per kilo. Quality amongst most pens was good to better considering the cold weather effects. This week’s yard average was up 3 cents to 325. 22 heifers made to 335, up 10 and averaged 297.2, up 30.
35 steers made to 340, back 2 and averaged 298.2, back 6.
256 veal made to 388.3, firm and averaged 336.9, back 5.
Thursday saw an extra 83 head turn up for the cow and bull sale. Some lighter bulls were penned and good heavy bulls were absent, easing the top back to 272.6 and the average slipped 7 cents to 248.3. Cows also averaged easier this week with the top back 30 cents to 274.2. The average was back 5 cents to 199.8, with the yard average 3 cents lighter at 203.6.
1 LimX S Thomas, Trafalgar 400 382.2 6 Lim I&A Hancock, Poowong 380 375.0 1 Lim Lawson-McCulloch, T/Sth 405 369.6 1 LimX M Maskell, Poowong East 370 368.0 3 CharX K Millar, Drouin 368 366.2 1 LimX A Nikolajew, Newry 425 362.2 Tooronga TPT, Neerim R White, Neerim Sth 3. Landmark, 4. Scotts, 5. Elders.
480 340.0 487 310.2 580 274.2 645 274.2 495 270.0 685 262.2 535 257.6 685 250.0
766 240.0 488 238.6 535 238.6 730 237.2 675 233.6 545 230.6
624 313.6 720 265.0
1528 1425 1496 1361 1347 1539
1 CharX P Webb, Nyora 3 Ang A&M Pettigrew, J/vick Heifers 1 Char G&N Duncan & PTN, N/J 485 335.0 2 EuroX P Webb, Nyora 480 330.0 Export Cows and Heifers 1 Ang K Millar, Drouin 1 GelbX J Fortune, Nilma 1 Ang A&P Laidlaw, Tanjil 1 Ang Grove & Allatt, Yarragon 2 Ang D&G Hunter, Trafalgar 1 Ang Parton & Wright, Hill End Dairy Cows 3 Frn M&J Winter, Warragul Sth 9 Frn Parton & Wright, Hill End 1 Frn JHC Farm 23, Jindivick 1 Frn Hurstdale AG, Drouin 1 Frn G&R Atherton, Drouin 1 Frn D&C Currie, Bona Vista Bullocks 4 Ang 1 Frn Bull 1 M/G Glenroy M/Grey, L/touche 675 267.2 1803 1 Frn J Ashby, Bayles 885 267.2 2364 1 Sim P&L Poulter, Heath Hill 630 258.2 1626 1 Hfd Parton & Wright, Hill End 710 246.6 1750
1. Gibbon, 2. SEJ,
1632 1510
1624 1584
1590 1768 1336 1796 1378 1712
1838 1163 1276 1731 1576 1256
1956 1908
What is behind the forecast is also important if we are to use it to manage the risk associated with seasonal conditions.
Perhaps you are thinking that there is a way of knowing exactly what the weather will be like for the next three months. More likely you are thinking that forecasters have no idea what is going to happen.
Well the truth is somewhere in between and the trick is to get a feel for how likely the rainfall and temperature forecasts are.
The average prediction is one thing, but the odds of some other outcomes is what we also need to manage risk more effectively.
The forecasts are based on things like the sea surface temperature and atmospheric indicators (eg: clouds and where they are, or are not, forming).
The strength and direction of wind in different parts of the world are also used.
Together they give an indication of how much evaporation might come from the ocean to form clouds and where they might travel and fall as rain.
As there are different climate drivers, the tough task is to work out what will happen when they all combine. I take my hat off to our climate forecasters.
Their forecasts are getting better all the time because they have more information to work with and new super-computers to process all the information.
However, it is not just the headline forecast we need to know about. It is also the other information provided with the Bureau of Meteorology’s forecast.
On May 7, 2017, “The El Niño-Southern Oscillation (ENSO) remained neutral. However, five of eight models favour a transition to El Niño by the end of September.
While some models indicate a faster warming of the tropical Pacific Ocean than others, the average outlook for September just meets the typical El Niño threshold.
The Indian Ocean Dipole (IOD) is currently neutral. Outlooks suggest a neutral IOD is likely to persist until at least late autumn, but four of six models suggest a positive IOD is likely by September.
If a positive IOD were to occur with El Niño, this can reinforce the typical dry signal observed in Australia during El Niño.
However, it should be noted that model accuracy during early autumn is lower than at other times of year.
In other words, based on current information, an average season is most likely but consider the possibility of dry conditions as the season progresses.
We will have a better feel once we get into winter.
In terms of forward planning, everyone will have their own approach.
If you are highly exposed to a poor season, it is a signal to put things in place early to cover off some of the risk. Bring your exposure back to an acceptable level (good for managing stress too).
If you are in a good position to take on risk, you might consider some tactics that enable you to capitalise on an average season.
Risk management is a very personal thing. Only you, and those in your business, can determine the best way to manage risk.
Dry season risk management tactics could include:
Forward purchasing of feed while prices are lower (to counter low silage/hay yields on farm);
Boosting spring fodder production early in the season before soil moisture runs low (to grow as much fodder as possible);
Reducing stock numbers (to decrease feed demand) and/or planting summer forage crops earlier in spring (or not at all).
Seasonal rainfall and temperature forecasting is one tool that can give a heads up on one of the biggest risks to agriculture; the weather.
Consider taking the time to go beyond the headline, ‘El Niño is coming’, and seek out the information behind the forecast.