March 12, 2024

Merricks Capital Agriculture Credit Fund Portfolio and Market Update – February 2024


The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.9%* in February and 10.2%* on an annualised basis since inception.

Australian red meat exports had a robust start to 2024, up 41% year-on-year to 133k tonnes (ABARES), driven by high weekly slaughter rates and increased demand in North America due to lower production in the US. The outlook for Australian red meat exports in 2024 remains strong, benefiting from global market demand spread across key economies and less competition from the US as it restocks herd numbers at 70-year lows as drought conditions ease.

The 2024 El Niño has also peaked earlier than expected and is now forecast to be gone by late spring (BOM). Water storage in the southern Murray Darling Basin is at 88% (MDBA), supporting high allocations for permanent irrigation and low temporary water prices. Despite a 17% forecast decrease to overall Australian agricultural production (ABARES), 2023/24 is still likely to be the third-highest production year in history with many farmers also benefiting from lower farm inputs yoy, like fertilizer prices and machinery parts.
No new loans settled during the month. Two loans were restructured to enhance investor returns and align the return of capital with transaction outcomes, one a borrower led property sale and the other a likely equity investment from a global dairy manufacturer.

Due diligence progressed on $250m of new investment opportunities with a focus on mixed-farming and meat & livestock assets. Rebounding cattle prices and wetter than expected summer conditions is driving borrower appetite for property acquisitions. Our expected peak LVR for the investments in due diligence is a weighted average of 49%. We expect the Fund to remain fully deployed for 1H 2024 from a cash perspective.

*These returns are stated net of fees and costs

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