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Booming cattle prices, and demand for stations, support Elders

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Shares in the Australian agricultural services group Elders Limited rallied, as the company reported rising profits thanks to booming cattle prices and strong demand for farmland.

Elders reported profits up 35% in the year to September, at $51.6m, with revenues up 9% to $1.64bn.

"High cattle prices have driven higher livestock earnings and also real estate sales demand for large cattle farming properties", said Elders chief executive Mark Allison.

Cattle prices in Australia have been supported by herd rebuilding, as farmers hold back cattle to increase herd numbers, after high slaughter driven by years of drought.

Strong cattle prices

Although Australian cattle prices, according to the Eastern Young Cattle Indicator, are down sharply from their peak last month, they are still up some 10% year on year.

"Cattle prices are expected to remain well above long term averages, driven by restocker demand and reduced supply," Elders said.

Elders expects strong livestock volumes For the first half of 2017 "with good feed availability across most of Australia".

Booming cattle station demand

Australian cattle stations are hot property at the moment, with a bidding war still ongoing for Kidman, which comprises the largest area of ranching land in the country, and indeed the world.

Demand for land improved profits in Elders' agency service by A$5.2m, and by another A$1.7 million for real estate Mr Allison said.

Elders expects real estate activity to remain positive next year, "driven by high demand for agricultural properties and sustained low interest rates".

Export business wound up

Elders also benefited from the winding up of its live cattle export business, which makes an operating loss.

The company's long haul live cattle export activities have been ceased, and the company is currently seeking buyers for the short hall business.

Elders shares in Australia were up 4.2%, at A$0.160.

By William Clarke

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