Australian prices buffered by currency falls



Australian commodity prices are being buffered by the falling Australian dollar to an extent not seen since 2008, with further interest rate cuts and falling terms of trade expected to continue pushing the exchange rate lower.

The National Australia Bank (NAB) Agribusiness March Rural Commodity Index shows an increasing gap between the USD and AUD indices, since they intersected in September 2014.

General Manager of NAB Agribusiness, Khan Horne, says the index in AUD terms is on the way up and USD on the way down.

“NAB’s forecast is for the AUD to fall to 0.74 USD this year and 0.73 in early 2016. If this occurs, the gap between the AUD index and USD index will widen further over the coming months.

“We expect another rate cut is most likely to occur in May, but if the economy continues to improve, the cut could be further delayed.

“A second cut to below 2 per cent is something we see as a possibility of only 35-40 per cent – significantly below the market’s current view. NAB’s forecast is for rates to start to rise again by late 2016.”

The NAB Rural Commodities Index fell 1.7 per cent in March in AUD terms, led by lower beef, lamb, fruit, vegetable and sugar prices. In USD terms, the index was down 3.3 per cent.

Cattle prices began to ease in February and continued to fall until late March. Overall, the Eastern Young Cattle Indicator fell 4.6 per cent (AUD) month on month to 424.7 AUc/kg.

“While prices remain much higher than the same time last year, generally below average rainfall across major Queensland beef regions in March has tempered restocker enthusiasm,” Mr Horne said.

The NAB monthly weighted dairy price indicator gained 6.3 per cent (AUD) in March; however the last two International Dairy Trade auctions have seen prices trend lower. This reflects improved weather in New Zealand and uncertainty around the supply impact of the removal of EU milk quotas.

Across other commodities, prices for wheat, wool sugar and cotton are expected to fall in 2014-15 compared with last year.

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.

See the full April 2015 Rural Commodities Wrap here

Agribusiness View provides the latest insights from NAB Agribusiness. Visit to sign up as well as to find the contact details for your nearest NAB Agribusiness Manager.

Important Note: Any advice in this editorial has been prepared without taking into account your objectives, financial situation and needs. Before acting on this advice, you should consider its appropriateness to you.

About NAB Agribusiness

National Australia Bank (NAB) Agribusiness is Australia’s leading Agribusiness Bank and has been supporting Australian farmers for more than 150 years. NAB employs more than 600 agribusiness banking specialists in 110 metropolitan and regional locations Australia-wide. With their local and industry knowledge, our Agribusiness team understand the unique financial and environmental needs of farmers and businesses beyond the farm gate – whether they provide inputs into agriculture or process, distribute or market primary produce. NAB also has a specialist Agribusiness Asia Desk to help Australian farmers make the most of the rapid growth in demand for high quality produce in Asia. We deliver a flexible range of agribusiness products and services by listening to and working with our customers, to tailor the best packages and advice for their businesses. For further information please visit



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