Australian agricultural commodity prices have taken a hit since February, with the appreciating AUD (up over 5 cents since January) putting further pressure on local prices in an already subdued global environment.

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.

While the NAB Rural Commodities Index rose slightly in January, it subsequently fell 1.1% in February and 1.2% in March. In USD terms, the index was up 3.4% in March.

In in latest rural commodities report, NAB observes that cattle prices have been under some pressure recently, with slumping US export prices and a higher AUD set against increased restocker interest after very high slaughter rates over the last three years.

“We forecast domestic saleyard prices to stay high this year (although less so for finished cattle), reflecting largely domestic restocker demand,” the report states.

“However, export prices are likely to remain under pressure given growing US beef supply and increasing competiveness from South America and the outlook beyond 2016 presents increasing downside risks to prices.”

Global wheat prices continue to trend lower in response to very strong global wheat supply.

For 2016, NAB does not see a significant upside for wheat prices in USD terms.

The latest three month rainfall outlook points to a generally dryer than average April for Australia. With sowing getting into full swing after Anzac Day, a lack of forecast rainfall presents a risk to the outlook for planting.

Looking to the coming year, NAB says it also sees little upside for global dairy prices, with moderately higher Chinese import demand but continued strength in global supply.

Source: NAB Agri