The increase in the index was largely driven by the increase in the price of wheat, which increased around 4%month-on-month in monthly average terms after declining for five consecutive months. Downgrades of expectations of global  wheat supply helped support prices. Prices for barley, fruit, vegetables, lamb, and diary also recorded increases in the month. Cattle prices were relatively unchanged in the month, rising around 0.7% in monthly average terms.

The El Nino event ended in April. Seasonal conditions were mixed across the country, with the north and east of the country experiencing above-average rainfall but elsewhere experiencing below-average rainfall. Looking forward, rainfall is expected to be above average for much of inland Australia over June to August.

Inthe Australian economy, inflation continued to moderate in Q1 to 4.0%y/y on the trimmed mean measure but came in slightly stronger than expected. The Federal Budget was announced in May; key measures include the Future Made in Australia program (including solar panel manufacturing), the extension of the small business instant asset-write off, and cost of living relief via a $300 energy subsidy for each household.

Read the full report here NAB Rural Commodities Wrap May 24