NAB Rural Commodities Wrap: October 2019
Wheat crop cops sharp downgrade amid tough spring.
Our podcast series returns this month, with NAB Agribusiness Customer Executive Neil Findlay discussing the latest developments in Australian agriculture. Listen now.
- Seasonal conditions have very clearly been – and remain – poor in much of New South Wales and Queensland. Conditions had been much better in southern Australia, but spring has been generally unkind, reflecting a lack of rain combined with heat and frost. This has led us to significantly downgrade our assessment for the wheat crop this month, with a 15.5 million tonne headline figure now a serious prospect.
- Despite the weakening conditions, livestock markets remain resilient, particularly for lamb. The National Trade Lamb Indicator stands at $8/kg – an exceptional figure, especially during spring. It is looking increasingly unlikely that the lamb market will see a “traditional” spring flush this year. The restocker cattle market remains soft, but demand for beef in export markets is strong. ABARES reports year to September Australian beef exports to China up 4% y/y.
- Water availability will remain a key risk coming into summer in many areas, both dryland and irrigated. Irrigation allocations in the Murray-Darling basin are generally very low and temporary water prices have responded accordingly. While 2019 has been a particularly challenging year, the increase in permanent plantings (almonds, citrus, table grapes etc) in the basin is likely to have a structural impact on water prices.
- Overall, the NAB Rural Commodities Index fell 2.9% in September, reflecting weakness in fruit, beef, wool, sugar and lamb prices, only partially offset by upward pressure in grains.
For further details, please see the NAB Rural Commodities Wrap October 2019.
About the Author
Phin is NAB's Agribusiness Economist. He is responsible for analysing and reporting on the trends and developments in the agribusiness industry and works closely in conjunction with bankers in NAB’s Agribusiness division.
Phin graduated with bachelor degrees in Commerce and Arts from the University of Melbourne and joined NAB in mid-2014. He was previously an economist at the Victorian Department of Primary Industries and Victorian Treasury.
