June 5, 2018

NAB Rural Commodities Wrap June 2018

The NAB Rural Commodities Index gained 3.1% month on month in May after falling 2.8% in April. On a year on year basis, the index was down 4.4% in May. The monthly gain reflects strong grain, horticultural, dairy, wool and cotton prices.

Key points:

  • Weather conditions across most of the country remain very challenging. With a good deal of planting already done and the rest looking for the break, grain growers need good rain soon. It is probably too late for much pasture growth until spring, and with little grain in storage domestic grain prices continue to surge. ASW indicative cash prices have reached low $300s in Victoria and mid-high $300s in Queensland. Conversely, cattle prices have been much weaker, with EYCI now at 466c/kg – the lowest level since May 2015.
  • These countervailing price forces are reflected The NAB Rural Commodities Index, which gained 3.1% month on month in May amid an 11.4% surge in wheat but a 5.6% drop in cattle. Elsewhere, horticultural, dairy, wool and cotton prices were higher and lamb has proven resilient in the face of the dry. Wool has been an especially strong performer, with the latest auction seeing EMI top 2,027c/kg.
  • A good winter would go a long way to reviving confidence for grain and cattle producers, although the latest BoM outlook is for below average winter rainfall across New South Wales, South Australia, Victoria and southern Queensland. Fingers crossed.

For further details, please see the attached report: