Growth, inflation and labour market all easing
Spring has brought not only considerable rain to parts of the country but also a further uptick in the NAB Rural Commodities Index.
Spring has brought not only considerable rain to parts of the country but also a further uptick in the NAB Rural Commodities Index. The index was up 1.5% in August and is on track for a moderate increase in September. This steady increase masks discrepancies across commodities, with weakness in major grain markets offset by strength in red meat and a rebound in dairy prices. Dairy has been standout performer following considerable weakness over the last two years – the NAB weighted dairy export indicator gained 6.8% in August and 21.5% in September.
Rain across eastern Australia has put winter crops on track for a bumper season, although flooding and waterlogging in some areas is a real concern, as is frost damage in Western Australia The Bureau of Meteorology’s outlook is for a neutral to wetter than average finish to spring, which could pose some risk of quality downgrades depending on how late the rain persists. Good rainfall has continued to drive restocker interest in red meat, with cattle prices remaining at record levels and lamb defying the usual spring price drop as producers retain more lambs.
NAB’s Rural Commodities Index includes 28 commodities (wheat, barley, sorghum, rice, oats, canola, chick peas, field peas, lupins, wool, cotton, sugar, wine grapes, beef, lamb, pork, poultry, dairy, apples, bananas, oranges, mangoes, strawberries, broccoli, carrots, lettuce, potatoes and tomatoes). The index is weighted annually according to the gross value of production of each industry in Australia.
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