National Australia Bank’s (NAB) Rural Commodities Index rose strongly in January, up 5.6 per cent in Australian dollar (AUD) terms. Sharply higher beef prices, and to a lesser extent higher lamb, dairy and vegetable prices more than offset mixed performance across grains.
The Rural Commodities Index has been expanded in 2015 to include monthly price and production data for 28 commodities, up from eight in the previous index, and is published today in the February Rural Commodities Wrap.
According to Khan Horne, General Manager of NAB Agribusiness, commodity prices have been tracking upwards in AUD terms since last October, which is reflected in the Index.
“The falling AUD has also had a significant impact in cushioning any falls in global prices for Australian farmers, and we expect this to continue into 2016,” Mr Horne said.
“NAB’s revised AUD/USD forecast now shows the dollar falling to a low of 0.74 this year and 0.73 in 2016 before recovery commencing later in 2016 and into 2017.
“In further good news for agriculture, there is the likelihood of at least another RBA rate cut in the coming months. We have brought forward our forecast August cut to May, with a 30 per cent probability of another cut thereafter,” Mr Horne said.
Looking ahead for production this year, the outlook sees some increases in dairy (1.5 per cent) and sugar (5 per cent), while some contraction is expected in wool (-3.5 per cent) and cotton (-46.9 per cent).
“For protein, we expect to see slaughter rates contract for beef and lamb as producers rebuild herds and flocks following record slaughter in 2014.
“Dairy producers have mostly enjoyed moderately higher production this season, although this has been offset by significantly lower international prices. A good autumn break will be key to enjoying strong production in the coming season.”
NAB’s Rural Commodity Index is a reflection of movements in commodity prices on a monthly basis in both AUD and US dollar terms.
It now includes 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.