NAB senior leaders take a closer look at Australia’s trade and export sector – providing all-important insights into how regional and agribusinesses can best respond to today’s challenges and opportunities.
The NAB Rural Commodities Index continued to decline in July – down by 2.1% mom. This was the ninth month in a row to record declines, with the index now 29.6% below the peaks recorded in June 2022.
Unlike the past two months, where declines in the index were driven by cattle and lamb prices, there were a wider range of commodities influencing the trend in July –with the main contributors being dairy (down around 7.3% mom), vegetables (which fell by 11.0% mom), barley and fruit (which decreased by 5.3% mom and 4.4% mom respectively).
Although cattle prices tracked broadly sideways in July, they remain the primary driver of the fall in the overall index since mid-2022, accounting for almost two-thirds of the overall decline over this period. The stabilisation of cattle prices could prove temporary, with El Nino likely to drive drier conditions, which when combined with constrained processor capacity, which could see prices falling around spring.
There was positive news for grain growers in early August, with China removing tariffs on Australian barley. It’s too early to know what impact this will have on prices, as it will take some time before barley flows back into China again.
Rainfall conditions across the country have remained mixed – with above average rainfall across much of northern Australia in July, while most of WA, SA, eastern NSW, Victoria and eastern Tasmania saw below average rainfall. The BoM’s outlook for the next three months anticipates above median temperatures and below median rainfall as being very likely – with El Nino a key contributor to this trend.
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.