The small gain in the index was largely driven by the increase in the price of wheat. After rising nearly 11% in May, the rally slowed in June which saw the price of wheat increase around 3.5% month on month in monthly average terms. The continuation of issues with global supply, particularly in the northern hemisphere, supported prices. Lamb prices also rose notably in the month, up 8.0% on May in monthly average terms, as elevated slaughter rates began to ease off. Cattle prices slipped a little in the month, but the market remains supported by export demand.

Seasonal conditions were broadly supportive in June, with the BoM recording rainfall as 9.2% above the thirty year average to 1990. Looking forward, the BoM remains on La Nina watch and four of the seven climate models it surveys suggest that sea surface temperatures could reach La Nina levels by October.

In the Australian economy, we now expect the RBA’s first rate cut to take place in May 2025. From there we see the RBA cutting rates by 125bps over the subsequent year or so. While growth has slowed over the past year and the labour market has eased, progress on inflation has been slower than expected, seeing the RBA on hold for longer.

Read the full report here NAB Rural Commodities July 24