• The global economy capped off 2013 on a strong note, with monthly measures of global industrial output and trade indicators picking up to finally be consistent with the more buoyant message that the advanced economy business surveys have been signalling since late 2012.
• However, the NAB business survey showed little improvement in domestic business conditions in November, with better trading and profitability offset by faltering employment. We still expect another interest rate cut by the RBA in May 2014, but risks remain for either an earlier cut or more than one cut should the labour market worsen.

In Focus – Wool

• Wool prices, as measured by the Eastern Market Indicator (EMI), ended 2013 on a strong note and are forecast to rise by 5% over 2013-14.
•  Since the onset of the GFC, the price premiums paid for the higher quality, super and ultrafine fleeces compared to the lesser styles have diminished significantly, reflecting a structural change in buyer composition and their buying patterns.
• The Australian Wool Production and Forecasting Committee has forecast a slight easing of 2% in shorn Australian wool production volume to 345 million kg in 2013-14, reflecting smaller opening sheep numbers and lighter fleece weights from poor autumn and winter conditions in many parts of the eastern states.

For further analysis download the full report.

• Rural Commodities Wrap – January 2014 (PDF, 536KB)