Australia Agribusiness December 2023: Is Christmas cheer on the horizon?

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.

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- Grains & oilseeds: Globally the supply and demand fundamentals for grains and oilseeds are looking better balanced than in the previous two seasons, hence prices are relatively lower. Although this is not equal to smooth sailing and the winds may shift price direction given the El Niño backdrop. Luckily, Australia has its engine and can navigate by itself among the big sharks out there.

- Dairy: Australian milk supply is slowly trending higher with production up 0.5% season-to-date (July-September). Milk production will likely finish the 2023/24 season marginally up on previous the year. This would be the first annual increase since the 2019/20 season.

- Beef: Just add rain. In a reflection of how sensitive the market is to producer sentiment, widespread rain has lifted confidence and seen some cattle prices bounce 40% in the past month. Rabobank believes this should be enough to see prices level out at these higher levels.

- Sheepmeat: Markets continue to improve as healthy rainfall events across the east coast boosted producer confidence, which benefited restocking and light lamb indicators. Supply continues to remain elevated in the near term as processors work through historically high volumes.

- Cotton: Prices have fallen once more and returned to trade around the 80 USc/lb mark. The continued weakening global demand outlook, coupled with improvement in supply forecasts, has taken the spring out of the market that was seen in recent months.

- Wool: A backdrop of bearish demand settings continues to influence wool markets. Wool prices across the range of microns were a mixed bag during September and are expected to remain range-bound in the near term.

- Consumer foods: The monthly read on consumer prices reconfirmed the stickiness of high prices in the food basket. Food and beverage inflation sequentially increased and posted a 5.3% YOY lift for October. The latest retail trade data showed total expenditure by Australian consumers across food channels continues to slow.

- Farm inputs: The final months of the year have shown a lack of global demand for farm inputs, although this does not guarantee lower prices ahead in 2024. The supply and demand elements are in a tangle and El Niño is no help.

- Interest rates and FX: The Australian dollar has surged above 66 USc as predictions of rate cuts in the US are brought forward. Goods deflation in China, Germany and Japan is helping with the fight against inflation, and we think that the RBA is probably done with rate hikes.

- Energy and freight: Crude oil prices fell again in November as an extended cease-fire between Israel and Hamas calmed markets and disagreements between OPEC+ members over production cuts muddied the waters over the outlook for the balance between supply and demand.

  • Stefan Vogel

    General Manager – RaboResearch Australia & New Zealand
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  • Angus Gidley-Baird

    Senior Analyst – Animal Protein
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  • Emma Higgins

    Senior Analyst – Agriculture
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  • Jen Corkran

    Senior Analyst – Animal Protein
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  • Michael Harvey

    Senior Analyst – Dairy & Consumer Foods
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  • Anna Drake

    Sustainability Analyst
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  • Edward McGeoch

    Associate Analyst – Agri Commodities
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  • Pia Piggott

    Analyst – Associate Analyst
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  • Vítor Caçula Pistóia

    Analyst – Farm Inputs
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