Sydney begins trading in beef futures

Press, 21 April 1979, Page 19

Sydney begins trading in beef futures

NZPA Sydney The Sydney Futures Ex-i change has started trading ■ in its fourth commodity, fro- 1 zer. boneless beef. The exchange chairman (Mr C. Hall) said that up to* 1200 people would be etn-j ployed in the futures industry by the end of thi s year. Speaking at the opening! ceremony for the bonelessbeef market, Mr Hall ' said I that by the end of the year* the exchange would be trad-; ing 10 contracts, including! interest rates, four currencies, and silver which are! yet to start. Apart from boneless beef' the exchange trades contracts in gold, which began’ one year ago today, live cattle, which began in July,: 1975, and greasy wool which began trading in 1960. Arrangements for trading in silver, interest rates and currencies are in various stages of finalisation. The four currency contracts to

be quoted will be the United;i ■ States dollar, the Japanese' < iyen, sterling, and either thej 'Swiss franc or Deutchmark. it Trading in boneless beef I i ’contracts began on a 'cautious note, with only lljl icontracts for July, 1979, 1 ; delivery traded at 100 c perj ; pound. Each contract repre-;’ isents 36,000 pounds 11 I (16,330 kg packed in 600; -cartons, and is equal to ab II container load of export fro-jl ■jzen beef. Investors have to! ;deposit $l5OO per contract. ’ ;i The chairman of the Aus-1 ■ tralian Meat and Livestock; ! Corporation (Mr R. G. I , Jones) said that he expected) f! the benefits of risk-coveringj ■I through the new market to widely. !i There was a good basis ,: for beef exporters to be i. major participants in both ’ the buying and selling of » futures contracts, he said. b “This would enable; 5 exporters to shed some of| ;; the uncertainty of the busi-i r’ness. It could facilitate 10-'

nger forward-sales which! some customers want, and it I could help packers to feel more confident about carry-j ing unsold stocks. ‘'The benefits of an active 1 ; beef futures market may not be limited to processors and I exporters who try in onel way or another to cover the) risks of doing business. ‘’lf futures trading can cover some of the risks, the benefits should percolate I through the total industry,” ’Mr Jones said. j He expected that beef tra- : ders would perceive the projection they could obtain ifrom buying or selling ■against expected future price fluctuations, and would use the futures market. The current level of beef prices reflected a recovery from the prices-trough between 1974 to 1978. I Since mid-1978 the recovery had been spectacular, jjust as the slide at the J beginning of the trough was I spectacular.

“Less spectacular, but still significant for traders, are the month to month price fluctuations which occur at other times.” said Mr Jones. “Boneless cow beef to the United States — the mainstay of our export business — brought prices at the beginning and end of theyear (1976-77) which were almost identical. Month to month price movements in that year, however, ranged from a maximum fall of 12.8 c to a maximum gain of 28.3 c per kg.” In the 12 months to June.’ 1978, Australia exported 757,000 tonnes of beef and veal, most of it in boneless form, worth $823.6M. Mr Jones said volume looked like being 50 per cent higher this year. The price of 100 c per lb for the July, 1979, contracts was around 12c lower than the overnight New York futures price for nearby months, but dealers said this resulted from technicalities and a direct comparison was not entirely valid. The beef covered by the contract is being packed according to United States Department of Agriculture, and Australian Department of Primary Industry standards. Participants in the market are able to trade up to fifteen months ahead. At present July, September, November, 1979; and January, March, May, and July, 1980 are quoted.