NAB Rural Commodities Wrap: July 2019

The NAB Rural Commodities Index rose 0.5% in June.

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Our podcast series continues this month with an interview with NAB Agribusiness Customer Executive Neil Findlay on horticulture, following our recent special report on the sector. To listen, click the link below:

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I also recently spoke to NAB Group Chief Economist Alan Oster about our latest economic forecasts, including the impact of recent RBA cash rate and income tax changes. To listen, click the link below:

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  • Winter rains have well and truly arrived in the south-east and south-west of Australia. The Western Australian wheatbelt, Victoria, South Australia and parts of southern New South Wales have all enjoyed good rain. In stark contrast, most of New South Wales and key regions of Queensland remain extremely dry.
  • Consequently, the winter crop outlook is very mixed indeed. Western Australia, South Australia and Victoria are set up for a decent season if rain continues, but prospects in New South Wales – with the key exception of the Riverina – are fairly poor. Reports suggest that plantings across much of the state are well below normal levels. Overall, we see the crop at 20.4 million tonnes nationally.
  • Lamb prices are now well into record territory, surging well past 900c/kg amid strong demand and a lack of supply due to  drought conditions since (particularly) last year. Prices in New Zealand are a little more subdued, but have followed the same upward trend since 2012-13. That said, we wonder whether prices can stay high through the spring flush.
  • Young cattle prices have trended slightly higher recently, although the premium for finished cattle remains. We don’t expect much upside for ECYI unless drought-affected areas of New South Wales and Queensland see some good rain.
  • Global Dairy Trade auction results have been negative in USD terms for the last four auctions, although from a high base. In Australia, opening prices have been very strong, although input costs remain a challenge, particularly in irrigated areas.
  • The NAB Rural Commodities Index rose 0.5% in June.

For further details, please see the attached NAB Rural Commodities Wrap July 2019