We expect growth in the global economy to remain subdued out to 2026.
Insight
October 20, 2015
Rural Commodities Wrap – October 2015
Agricultural prices continued to diverge in September. Most major grains fell as did fruit, vegetables and trade lamb (reflecting seasonal trends) however dairy prices strongly rebounded and sugar, beef and rice were also higher in AUD terms.
Key points
- Agricultural prices continued to diverge in September. Most major grains fell (wheat was down almost 10% in AUD terms), as did fruit, vegetables and trade lamb (reflecting seasonal trends). However, dairy prices strongly rebounded on supply concerns. Sugar, beef and rice were also higher in AUD terms. Overall, the NAB Rural Commodities Index was off 1.5% (AUD) and 4.1% (USD).
- After dropping below 70 US cents in mid-September, the AUD since rallied and is now above 72 US cents. Overall, we see the AUD as a 65 to 75 US cent currency (on the wide) through 2016 and forecast the AUD to bottom out at 68 US cents in Q1 2016.
- Signs that the effects of El Niño are ramping up are reflected in a very hot and dry three month rainfall outlook for south-eastern Australia. However, the Bureau of Meteorology forecasts that Western Australia may enjoy decent rain and conditions are expected to be neutral in much of Queensland. This outlook is likely to put further pressure on graziers in Victoria and New South Wales coming into summer.
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