Growth, inflation and labour market all easing
The index tracks 28 commodities weighted by the relative size of each commodity in the Australian agricultural sector.
In September, the NAB Rural Commodities Index fell 2.2%, largely reflecting weak cattle prices. On the other hand, domestic grain prices strengthened, reflecting a premium in a season where conditions are wildly varied between regions. Parts of New South Wales and Queensland have seen record breaking temperatures in close proximity to frosts, while southern Western Australia, and more recently south-east Queensland, have seen soaking rains. This month we have again cut our wheat production forecast, this time to 18.7 million tonnes – the lowest in a decade.
The outlook for the remainder of the year and into next is somewhat more positive. The latest outlook from the Bureau of Meteorology points to average to above average rainfall for most of the continent for the rest of 2017, although temperatures are likely to be above average. Recent rains in Queensland have already seen a partial recovery in cattle prices. While the Australian dollar remains higher than most agricultural producers would like, recent pressure has been downward and we see the currency falling to 75 US cents at the end of this year and spending most of next year at the 73 US cent mark.
For further details, please see the attached report.
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