Australia Agribusiness March 2023: Rain Check and Rate Hikes

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: The discount that Australian track wheat prices have traded compared to global prices has eroded and moved to zero across many port zones. Whether local prices move to premium will depend on whether dryness continues, whether farmers’ selling remains restrained, and how much more export capacity is created.

- Dairy: A weaker tone has settled in across dairy commodity markets. The next phase of the cycle will be heavily influenced by the timing and strength of a return to the market by Chinese buyers. China's reopening is good for commodity markets, but the short-term consumer response remains somewhat uncertain.

- Beef: Production is on the rise in 2023, as increased cattle inventory becomes productive. Consumer markets will be softer amid slower economic conditions and prices, while remaining historically high, we expect prices to retreat from their record levels and stabilise.

- Sheepmeat: We expect lamb production to push further into record territory. Softer consumer demand is likely to impact lamb more as a premium-positioned product, but new trade agreements and recovery in China provide possible upside.

- Cotton: Increasing global consumption in major Chinese markets is a promising sign of increased demand, while potential supply chain disruptions loom on the horizon in the wake of Turkey’s devastating earthquake impacting major mills and the textile-processing region.

- Wool: There are positive signs for wool demand, with sales volumes and prices seeing increases throughout February. Retail demand from key major markets continues to grow as consumer spending remains promising.

- Consumer Foods:  The latest results from the retailers showed food inflation gathered momentum in Q4 2022. Product availability is still an issue flagged by the retailers, as localised supply chain issues linger. Consumers continue to respond to cost-of-living pressures, and confidence is weak.

- Farm Inputs: “All quiet in the farm inputs front” is not an Oscar-winning quote but defines the current status. There are expectations among stakeholders of how the needle will move when next-season buying starts, while stocks are building up.

- Interest Rates and FX: Reserve Bank Governor Philip Lowe struck a defiant tone in the testimony that he gave before the parliament in February, highlighting the importance of getting inflation back under control. We expect further 25bp rate hikes in March, April, and May to take the cash rate to 4.10% before pausing in June.

- Energy and Freight: Brent crude prices slid lower again in February as synchronised interest rate tightening globally weighed on the demand outlook. The Baltic Panamax index (a proxy for grain bulk freight) is approaching its pandemic low before a quick rebound.

  • Stefan Vogel

    General Manager – RaboResearch Australia & New Zealand
    Read more
  • Emma Higgins

    Senior Analyst – Agriculture
    Read more
  • Genevieve Steven

    Analyst – Agriculture
    Read more
  • Angus Gidley-Baird

    Senior Analyst – Animal Protein
    Read more
  • Dennis Voznesenski

    Analyst – Agriculture
    Read more
  • Pia Piggott

    Analyst – Associate Analyst
    Read more
  • Michael Harvey

    Senior Analyst – Dairy & Consumer Foods
    Read more
  • Vítor Caçula Pistóia

    Analyst – Farm Inputs
    Read more
  • Edward McGeoch

    Associate Analyst – Agri Commodities
    Read more