Growth, inflation and labour market all easing
Agricultural commodity prices continue to perform generally very well, rounding out a generally strong period for many agricultural producers.
With half the year gone, 2021 is shaping up as another very strong year for Australian agriculture. The combination of good commodity prices and strong seasonal conditions continues across many parts of the country, following an excellent 2020. Cattle prices remain close to record highs and domestic grain prices have now increased in response to a global rally. Australian grain remains competitively priced into South-East Asia, and with plenty of old season crop remaining, opportunities abound.
ABARES’ latest estimates for the 2021-22 winter cropping season point to well above average crop, driven partly by planting area (the area planted to wheat is forecast to be the highest in a decade) but most importantly by improved yields driven by good subsoil moisture. ABARES sees a very strong 27.8mmt of wheat this season. Last month, we flagged dryness concerns in south-east Australia. We are now substantially less concerned about the Riverina, but western Victoria and south-east SA remains a little dry. Much of Queensland cattle country is likewise dry. The Bureau of Meteorology’s three month outlook points to wetter than average conditions across the country over winter and into spring.
Dairy opening prices have been released (and in the case of Saputo and Fonterra, revised) and represent a strong result for producers. For more detail, see our in focus section on page three.
Overall, the NAB Rural Commodities Index was up 2.5% month-on-month in May. The index is now 6.2% above the same time in 2020.
Australia and the UK have confirmed the broad terms for a free trade agreement. The agreement is yet to be ratified, but includes substantially improved market access for Australian agricultural products.
For further details, see the NAB Rural Commodities Wrap June 2021
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