Rural Commodities Wrap – November 2013

Global growth remains at a moderate sub-trend pace and it’s expected to pick up to slightly below trend in 2014. However, NAB business conditions remain weak and forward indicators deteriorated slightly. There are still no signs of a recovery in non-mining investment.

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  • Global growth remains at a moderate sub-trend pace and it’s expected to pick up to slightly below trend in 2014.
  • However, NAB business conditions remain weak and forward indicators deteriorated slightly. There are still no signs of a recovery in non-mining investment with trade-exposed industries still struggling with the continuing strength of the AUD.
  • It’s our view that economic activity will remain soft over coming quarters and current economic optimism will fade, prompting the RBA to lower the cash rate again in May (previously February) to 2.25%.

In Focus – Agricultural Commodities Outlook 2013-14

  • In the near-term, global grain markets will remain bearish despite signs of demand recovery from major global consumers. Meanwhile, prices of proteins and dairy are expected to fare better, with livestock herds declining around the world, such as the US, Mexico and Australia, at a time when global demand growth has accelerated in pace.
  • Within Australia, the “North-South” divide in climatic conditions, with decent rainfalls in the southern regions and prolonged dry conditions in the north, will be the main determinant of production outlook for crops and livestock in 2013-14.
  • Within Australia, the export outlook for the different commodities in 2013-14 is likely to be highly variable, with dairy, lamb and live exports expected to be the top performers while softs of cotton and sugar are likely to fare the worst. 

For further analysis download the full report.