An increase in the price of wheat once again drove the index higher. Wheat prices rose a little over 10% in the month, as prices rallied on the back of poor seasonal conditions in Europe which weighed on global supply. Prices for barley, canola, and lamb also increased in the month. Cattle prices were little-changed again in May, rising around 0.6$ in monthly average terms.

The Bureau of Meteorology announced a La Nina watch in May, which means there is a roughly 50% chance of a La Nina event developing later in the year. Seasonal conditions were mixed across most of the country in May, with  national rainfall 34.9% below the long-term national average in the month but above-average in New South Wales and Western Australia.

The Australian economy continues to experience a weak period of growth, and GDP grew just 0.1% q/q (1.1% y/y) in the first quarter of this year. Despite the slowing in economic growth, strong employment growth saw the unemployment rate tick down to 4.0% in May. The RBA left the cash rate unchanged at 4.35% at their meeting in June, as was widely expected.

Read the full report hereNAB Rural Commodities Wrap June 24