ANZ state agribusiness manager SA & NT Stephen Radeski inspecting the bulls on display at Kingarth Angus stud at Nairne on Sunday as part of the SA Beef Field Days.ANZ state agribusiness manager SA & NT Stephen Radeski says low interest rates offered some opportunities for farmers.
“Interest costs remain a key component of farm profitability, yet are one of the more readily managed under a well-constructed risk management strategy,” he said.
“In terms of interest rates, these are certainly at attractive levels to consider an increase in interest rate cover or locking in of rates.
“There may be further falls in longer end fixed market rates, which would allow for interest rate strategies to be developed over the longer term.
“Given these historically low levels, farmers should consider their current debt levels, their ability, and likelihood, of repayments as part of their own interest rate strategy, along with the capacity of their businesses to absorb future interest rate volatility.”
Mr Radeski said the value of the $A was not expected to improve anytime soon.
“Being a predominantly export orientated agricultural producer, Australian farmers obviously have a focus on $A movements but also on the underlying volatility of FX markets in general,” he said.
“The current fall in in the $A against the US$ continues to provide support for commodity prices – for instance, it has largely masked a 10 per cent decline in US$ wool prices in recent months.”
He said analysts do not expect to see $A values improve significantly, although short-term volatility was likely even as the $A potentially creeps lower over the 2015-16 period.
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