Beef producers are looking more towards specialised stock funding facilities to finance fast-emerging opportunities in an environment of extreme volatility, agri lenders report.
The mix of seesawing livestock prices that have hit record levels this year, widespread good rain with more forecast and pandemic uncertainty is changing the finance needs of producers.
Combined with the fact many have already heavily-drawn lines of credit and bank loan facilities stretched due to the drought, the need to get cash flow back on track in grazing operations has seen many look outside the more traditional funding options.
Agriculture finance company Agrifunder says it is fielding strong inquiry around its specialised livestock funding product that supports producers with their restocking and trading needs.
Business development manager Dee Commins said producers were wanting to be prepared to take immediate advantage of an opportunity when it presented itself.
"They need to have funds established and ready to go in the current environment," she said.
"People are spending more time on the computer, keeping a close eye on markets and sales platforms - from a funding perspective you have to have all your ducks lined up and be ready to take advantage of something at the click of a button."
Beef consultants say replacing breeders, where feed was adequate, makes sense now, even at high prices, as it allows grazing operations to return to a strong cash flow position quicker.
Analysis of trades on steers in many instances also points to profitable ventures, depending on the view one takes of what the market will be like in the next six to 12 months.
However, both consultants and analysts have also urged caution among those producers with 'grass fever' on account of the market devastation occurring overseas due to coronavirus.
Ms Commins says stock trading facilities can sit alongside banking neatly.
"In a world where banks are looking to consolidate services, the element of specialisation to farmers is becoming less and less - the days of shearing advances are far less common," she said.
"Traditional funding platforms through banks perform a vital role but in many cases are now capped out due to drought so producers don't have access to capital to participate in markets quickly - that's where specialised funding providers come into play."
Products are typically targetted at short term opportunities and are linked heavily to technology platforms.
"It means producers can look to restock without impacting bank arrangements and facilitate greater cash flow," Ms Commins said.
The overlap of COVID-19, fires, floods, drought and record cattle prices was making an already dynamic industry even more volatile and agility would be key, she said.
"For instance, even though the rain has been good, not everyone has received it it so while there might be an incredible opportunity for those with feed on hand at the same time just 50 kilometres down the road it's a different story," Ms Commins said.
"And there are so many unknowns with the wider trade market around what we are heading into.
"However, the fundamentals are there - a massive global red meat deficit. Australia's clean, green, safe food branding, established globally, will support us well."
Start the day with all the big news in agriculture! Click here to sign up to receive our daily Farmonline
The story Hot demand for specialised stock funding as producers play a volatile market first appeared on Farm Online.