Higher than average rainfall across much of Australia has boosted restocker demand for cattle and set up good planting conditions for grain growers according to the latest Rural Commodities Wrap from NAB Agribusiness.
Higher prices for beef, lamb, chickpeas, and fruit and vegetables saw the NAB Rural Commodities Index rise 4.1 per cent in April 2017 after a small drop in March 2017. Price falls in sugar, pork and some grains were not enough to offset the strong gains elsewhere.
Beef prices were up 6.4 per cent in April, reversing the downward trend since late last year, and lamb prices were up 6.6 per cent.
NAB Agribusiness Economist Phin Ziebell said cattle prices have been pushed higher by increased restocker interest after good rain across parts of Queensland and New South Wales.
“The price bump is good news for beef producers but it’s not clear if it will continue as the gap between US and Australian cattle prices remains well above historic norms and we don’t see much upside in US cattle prices in the near future,” Mr Ziebell said.
“Constrained supply has been the major driver of higher lamb prices, and lamb and mutton producers with good stock levels have generally done very well. We expect stable to moderately higher lamb prices this year.”
Wholesale fruit and vegetable prices moved favourably in April 2017, with fruit up 4.3 per cent and vegetables up a massive 15.1 per cent. Fruit and vegetable prices are expected to show strong seasonal volatility but the sector has seen quite limited growth in wholesale prices since 2010.
Mr Ziebell said the autumn rainfall has left grain growers in a better position than previously forecast, however, a drier long term outlook is likely to see downward pressure on production numbers in the 2017-18 season.
“Price-wise, canola remains a stand-out and current prices could see higher Australian plantings this year.
“Chickpea prices have jumped, surpassing AUD 1,000 per tonne, and are likely to remain higher than other broadacre crops in 2017.”
The Bureau of Meteorology’s climate outlook for the rest of autumn and winter remains generally much drier than average. However, a less aggressive El Niño forecast for 2017 is good news for farmers.
NAB’s forecast for a lower AUD in the second half of 2017 remains unchanged and the bank expects the Reserve Bank to keep interest rates on hold through the remainder of 2017 and 2018.