Australia's drought-hit farms like lambs to the slaughter

Source(s)
Thomson Reuters

By Jonathan Barrett and Colin Packham

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The drought in Australia’s east, one of the worst on record, is impacting every area of rural life, often with global trade and price implications.

Already many cattle graziers are being forced to sell stock they can no longer feed.

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For the time being, strong U.S. demand is absorbing the extra supply, keeping prices 10 percent higher than their average over the last eight years.

But the United States has already amassed more than 2.5 billion pounds of excess beef, pork and other meats in cold storage facilities, according to U.S. data, and may soon ease off buying.

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Australia - the world’s fourth-largest wheat exporter - is expect production of its staple grain fall to a decade low as dry condition stymie yields.

Quality is also low as the dry weather bites, a key driver in benchmark global prices soaring to a three-year high this week.

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Some Australian farmers are opting to cull their dairy herds due to lack of feed, forgoing years of income.

“We are financing dairy farms at the moment and we have seen a lot of dairy cows going into slaughter for beef,” said Adrian Redlich, chief executive at Melbourne-based fund manager Merricks Capital.

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