Beef Contract Helps to Minimise Price Risk

This week, we featured an article from Glenneis Kriel in South Africa on how a new beef futures contract is helping producers there.

A previous attempt to do the same thing never really took off and was halted a few years later but Dr Raphael Karuaihe, manager of the commodity derivatives market at the Johannesburg Stock Exchange (JSE), believes the market is ready for this contract now.

“The commodities derivatives market was a complete new concept back then, especially for farmers and agricultural role players.

"Many farmers have since started using derivatives for wheat and maize to hedge themselves against price fluctuations. The community in effect has become more accustomed to the idea of using derivatives to lock in prices,” Dr Karuaihe said.

Dr Karuaihe added that the contract couldn’t have come at a better time as the drought in South Africa is expected to bring a lot of price volatility to the meat market.

“The contract will help farmers, abattoirs, retailers and restaurant owners to reduce their price risks. Speculators on the other hand could use the contract to increase returns,” he said - click here to read more.

In consumer news, a research effort by the UK's Agriculture & Horticulture Development Board (AHDB) showed that the majority of consumers feel they eat the right amount of red meat and do not need to cut back.

The AHDB Consumer Tracker, which is conducted by YouGov, revealed that 55 per cent of respondents felt they eat the right amount of red meat, with 24 per cent saying they were not concerned about the amount they eat. 

Laura Ryan, strategy director for AHDB Beef & Lamb, said: “Our research is encouraging in that the majority of people are content with the amount of red meat they are eating.

“It’s important to remember there are a number of long-term changes in lifestyle and purchase habits that have continued to influence the way in which consumers buy and eat meat.

“These include the growth in one to two person households and the continued drive for convenience, which our cuts development work continues to address with initiatives such as the mini roast.” - Read more.