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 percent in April after a small drop in March. Price falls in sugar, pork and some grains were not enough to offset the strong gains elsewhere.
Beef prices were up 6.4pc in April, reversing the downward trend since late last year, and lamb prices were up 6.6pc.
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.”
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 this year, surpassing $1000/t, and are likely to remain higher than other broadacre crops this year.”
The Bureau of Meteorology’s climate outlook for the rest of autumn and winter remains generally much drier than average. However, a less aggressive El Niño forecast for 2017 is good news for farmers.
NAB’s forecast for a lower A$ 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.
Click here to view the latest Rural Commodities Wrap from NAB Agribusiness.