NAB Rural Commodities Wrap: October 2016
The progress of the season, which has been generally much wetter than average in eastern Australia but dryer in the west, continues to be the major consideration for Australian agriculture.
- The progress of the season, which has been generally much wetter than average in eastern Australia but dryer in the west, continues to be the major consideration for Australian agriculture. Well above average rainfall in September and into October across eastern Australia, combined with storm damage in some areas is creating potentially serious problems for grain growers, who had been hitherto on track for a bumper season. In Western Australia, a dry and very cold start to spring has caused frost damage. While we still see the headline Australian wheat production figure to be well above average, quality and yield downgrades, especially in New South Wales are a distinct possibility.
- Rainfall is also slowing milk production in parts of Victoria (northern Victoria especially), while dairy prices have been more muted of late after significant gains in August and September. The rain has also limited the usual seasonal flush of sheep and cattle, with flock and herd rebuilding taking more precedence this year after dry years in many regions. While cattle prices have come off their recent records, we note that there are considerable downside risks in 2017 and beyond.
- Overall, in AUD terms the NAB Rural Commodities Index gained 1.7% in September and partial data point to a decline of 0.9% in October (excluding horticulture). In USD terms, the index was up 2.8% in September.
For more details, please refer to the attached document.