A flurry of cattle futures bids in recent weeks have seen a flurry of trading volumes and a significant increase in prices, which is pushing the world’s biggest cattle markets to the edge of their capacity.
The latest feedlot auctions have all been bought to boost feed prices on a global market, said Matthew Riddle, director of global markets at futures provider Futures Group.
The most recent auction saw the UK’s biggest futures contracts – a total of 10,000 tonnes of beef – go up by as much as 11.8 per cent.
That represents a 40 per cent jump on the previous auction and more than a doubling of the prices that were initially set in the past, according to Futures.
The feedlot prices are all being bought to help support the global demand for beef.
Futures Group says it expects a further rise in prices to continue into 2018, which could mean that feedlot producers will have to raise prices.
“The demand for cattle is going to continue to grow, as people start buying into this [farming] boom,” Riddle said.
“There are a lot of big cattle producers who are going to be able to afford to raise feed prices.”
The feed-in tariff for cattle in the UK currently stands at around 15 per cent, while feed-out tariffs have been set to increase by around 6 per cent this year.
The Feed Industry Association said it was concerned about the rising prices for cattle, which have already prompted it to call for the repeal of feed-ins and feed-outs laws.
“We are worried about a major increase in feed prices for our customers in 2018,” said Mike Smith, the chief executive of Feed Industry Australia.
This year has been a big one for feed-up, the largest feed-to-demand auction in the world.
On Wednesday, UK auction house Fonterra’s cattle feed-market ended up at its highest prices since the Brexit vote in June, as the company announced that it would buy up to £50 million worth of feed and feedland contracts from producers.
“Foalers will now have more time to decide where they are going in the market and whether they want to invest in their cattle,” said Fonters chief executive Mark Jones.
Some of the world’ biggest beef producers have already announced that they are buying up feed contracts, with the likes of Australia’s Woolworths, US Tyson and Germany’s Procter & Gamble all announcing the purchase of feed in recent days.