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Mecardo Blog

How do wool minimum price contracts work?

Posted by Matt Dalgleish on 17 October 2018

Markets can be volatile, however there are a number of tools which are available to reduce the risk of adverse price movements. 

There are two predominant strategies to reduce the effect of price volatility when selling wool. These are by using a forward contract or using a minimum price contract (MPC). In this article we examine the MPC, and how it can be used by producers.

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Topics: Australian wool industry, Wool market / wool price, Risk management

The state of farm management deposits

Posted by Andrew Whitelaw on 5 September 2018

Up, down, up, down, down, down & up. Farming is one of the most variable occupations in the world. Our profitability is determined by several factors including drought, pricing & government intervention. Australia is lucky to have access to farm management deposit (FMD) accounts to mitigate the impact of seasonal conditions. In this update we look at the state of FMD accounts at present during the drought.

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Topics: Agriculture, Farm management deposits, Drought, Risk management

A $50bn risk to Australian farmers.

Posted by Andrew Whitelaw on 20 June 2018

In recent years overseas travel has become cheaper and easier and people are travelling to more exotic and ‘unusual’ destinations.

This travel brings with it the risk of disease spread on the feet of travellers, the worst of which is the dreaded foot and mouth disease. 

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Topics: livestock, Risk management, Animal Welfare

Investment in agriculture: Are all your eggs in one basket?

Posted by Olivia Agar on 26 February 2018

The philosophy ‘Invest in what you know’, advocated by Warren Buffett, has been a popular guide for investors. The premise is that having specialized knowledge in the field should mean an investor can pinpoint strengths and weaknesses of the business, evaluate the industries climate and know when to make a move. But is this really an ideal strategy to follow for those in agriculture or is it placing all your eggs in one basket?

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Topics: investment, Risk management

Flaming frost, Flipping wind, dastardly dry, blooming rain – Is there anything we can do about it?

Posted by Andrew Whitelaw on 22 January 2018

Anyone who has worked in Australian agriculture for more than a couple of days will have heard one of the above, albeit most likely with stronger adjectives.

If there is one guarantee for farmers in Australia it’s that we are at the mercy of the gods when it comes to weather. In such a big country, there will always be an area where something will be going wrong with the weather.

Many of you will have heard about multiperil crop insurance, but what about weather insurance & derivatives. Are these a suitable risk management option for protecting against the weather?

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Topics: insurance, Agriculture, Risk management

How to tell if the market is about to change direction – Part three

Posted by Matt Dalgleish on 7 March 2016

This blog is the third instalment in a series on technical analysis/charting tools used to predict potential change in market trend. The purpose of these series of blog articles is to give our readers a more in depth background on a variety of technical analysis tools that can be used as a reference point for readers unfamiliar with charting.

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Topics: Risk management, markets, technical analysis, trading

I don’t like the grain price, but I need the cash!

Posted by Angus Brown on 23 November 2015

It’s not often headers are out in south western Victoria in November, but just yesterday a grower started harvesting Canola next door.  As with many growers, it’s decision time in terms of marketing. In terms of Canola, the $20 fall in price in the last fortnight has made the initial plan to simply sell Canola at harvest now a little less palatable. 

Wheat prices have also eased as we moved into harvest, with wheat values falling on the back of lower international markets. These falls in price present a conundrum for the growers who need cash, but don’t like the price.

Does that sound familiar?

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Topics: Risk management, Grain market / grain price, Bank Swaps

Grain Swaps - farmers' friend or hazard to be avoided?

Posted by Robert Herrmann on 23 November 2015
  • “I won’t use swaps because if the market goes up I will lose”

  • “I have heard of a wheat farmer who lost his farm as a result of taking a Grain Swap”

  • “The bank always wins; they know more about the market than we do”

  • “With swaps, someone always wins and someone always loses”

Sound familiar?

These are just some of the statements we have heard from farmers when the issue of swaps is raised.

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Topics: Risk management, Grain market / grain price

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