Key points

• The NAB Rural Commodities Index continues to rise in AUD terms (up 4.1% in July), supported by a lower dollar and higher beef, fruit, domestic wheat and sugar prices. Prices have seen greater tumult on international markets as stormy US weather affects major grains and continued sluggish international demand continues to punish dairy auction results. Overall the index was down 0.4% in USD terms in July.

• We have revised down our AUD/USD forecasts, looking to 70 US cents by the end of year (previously 72) before bottoming out in Q1 2016 at 68 US cents (previously 71). This remains good news for Australian agricultural producers.

• Weather remains a concern, with rainfall still patchy overall in July and parts of the country still very dry. The Bureau of Meteorology’s latest three-month rainfall outlook to October predicts below average rainfall in the top end, much of Victoria, Tasmania and northern New South Wales but above average falls in Western Australia and neutral conditions in the Riverina. Drier conditions in northern and eastern Australia through late winter and early spring are consistent with a ‘classical’ El Niño event.

For further analysis, download our full report.

• Rural Commodities Wrap – August 2015 (PDF, 2MB)