Compared with the peak in rural prices in June 2022, the NAB Rural Commodities Index index is now 30.7% lower, and at their lowest levels since January 2020.

The key drivers of the decline in the index in August were cattle (down by 5.4% mom), vegetables (which fell by 6.4% mom) and lamb (which dropped 11.2% mom). In contrast, barley prices have trended higher since the start of August, when Chinese authorities removed tariffs on Australian imports.

Overall, cattle prices have been the key driver of the decline in the index since June 2022 – accounting for around 64% of the total fall. Vegetables drove another 12%, while dairy accounted for 6% of the decline.

On average, rainfall was almost 50% below average in August, with the NT, Queensland, NSW and SA being particularly dry. The BoM’s outlook for September through November sees above median maximum temperatures across the country as very likely, while below median rainfall is likely (60%-80% chance) in southern WA and two-thirds of eastern Australia and very likely (greater than 80% chance) in southern Australia and eastern Queensland).

Although the BoM has not yet declared an El Nino event, the bureau’s El Nino alert remains and they anticipate that it will develop in spring (consistent with sea surface temperatures in both the Pacific and Indian oceans above threshold). This is likely to result in hotter and drier conditions across eastern and northern Australia, negatively impacting a range of key agricultural regions.

For the full report, see here NAB Rural Commodities Wrap September 2023