Australia Agribusiness August 2023: The Excitement Is Back!
Here are the main highlights for some of Australia’s key commodities this month. The full report provides an overview of the developments to watch in the upcoming weeks.
- Grains & Oilseeds: Farmers in northern NSW and QLD should see local production levels and grain demand drive wheat pricing, while other regions’ pricing will be more driven by global events in the coming months. The short-term impact of the Black Sea escalation is a slowing of Ukraine’s exports, which has already led to volatile global crop prices.
- Dairy: Underlying global commodity market fundamentals remain soft. Through July, Oceania spot commodity prices fell across the board. However, the export supply outlook is not strong and now faces negative weather impacts and tightening farm margins as feed costs rally.
- Beef: The stagnant market is expected to continue as producers await an indication of what the upcoming season will bring and processors manage high volumes of beef across supply chains. Until one of these things changes we don’t expect much market movement.
- Sheepmeat: We do not expect any significant upside shift in sheepmeat prices in the coming months. Supply continues to remain historically high while demand, albeit showing slight growth in export markets, struggles to keep up.
- Cotton: Cotton prices are searching for a new, higher pricing level after prices increased throughout July, supported by reductions in global production forecasts mainly due to drier conditions in the US.
- Wool: Wool prices rose slightly in July, bucking the downward trend seen in recent months. Retail sales growth in several markets is helping to hold demand off the back of China’s softening exports and weaker manufacturing activity.
- Consumer Foods: There is light at the end of the tunnel for Aussie consumers with the latest quarterly read on food inflation showing a sequential slowdown for the quarter. While food inflation was still high at 7.5%, there was deflation across meat and vegetables.
- Farm Inputs: For the coming months, international fertiliser prices are poised to decrease or remain stable. Despite production reductions since early 2023, supply is still greater than demand, putting pressure on prices, even now during the South American restocking period.
- Interest Rates and FX: RBA has kept the cash rate unchanged in August. Inflation fell faster than forecast in the second quarter of the year. That suggests that the end of the RBA hiking cycle is nearing, but there are still signs of underlying strength in the economy.
- Energy and Freight: Crude oil prices rallied in July as stronger-than-expected growth in the US and ongoing tensions in Ukraine drove markets higher.
Where to go from here
Stefan VogelGeneral Manager – RaboResearch Australia & New Zealand Read more
Emma HigginsSenior Analyst – Agriculture Read more
Angus Gidley-BairdSenior Analyst – Animal Protein Read more
Dennis VoznesenskiSenior Agriculture Analyst
Pia PiggottAnalyst – Associate Analyst Read more
Michael HarveySenior Analyst – Dairy & Consumer Foods Read more
Vítor Caçula PistóiaAnalyst – Farm Inputs
Edward McGeochAssociate Analyst – Agri Commodities