Australia Agribusiness November 2023: Are the tides of prices turning?
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: El Niño is cutting Australian harvest volumes to be close to the five-year average. This also allows local wheat prices to stay rather supported compared to those in the US and Europe. Australian canola prices are influenced by the EU, where imports of Ukrainian canola and sunflower pressure prices.
- Dairy: The dairy commodity market has shown some signs of life. Lower prices had offered international buyers an opportunity to procure raw materials at attractive prices. The milk supply outlook in key production regions is looking less favourable, which is providing price support.
- Beef: While market fundamentals remain the same – forecast dry seasonal outlooks, higher cattle slaughter volumes, and soft consumer markets – Australian cattle prices found a floor in October. It looks like pessimism has left the market and some price stability may finally return.
- Sheepmeat: Prices rebounded during October after several months on a downward trajectory with all indicators lifting month-on-month. Australian slaughter numbers saw reductions as rainfall throughout the southern parts of NSW and VIC boosted producer confidence in holding or purchasing stock.
- Cotton: Markets have been reacting to downward revisions to global supply forecasts – with the exception of Brazil, where the supply outlook is improving. Locally, the focus will be on the impact of a drier season on the Australian crop.
- 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: Quarterly food inflation moderated in September with a vast majority of categories seeing a slowdown. Fresh produce and red meat are down, while a cheese sandwich is expensive. We expect food inflation to continue to moderate, but with weather and energy market risks ahead.
- Farm inputs: For farmers, the overall beneficial outlook for farm inputs is still in place despite the Israel-Hamas war. The situation could be better for farmers’ 2024 budgets, and currency and energy costs are risks to watch.
- Interest rates and FX: Higher-than-expected third quarter inflation has increased the odds of the RBA delivering another rate hike on Melbourne Cup Day. The Aussie dollar has remained under pressure, and we expect that it will be sold heavily if the rate hike doesn’t materialise on the 7th of November.
- Energy and freight: Crude oil prices fell slightly in October despite the outbreak of war between Israel and Hamas. If the war spreads to draw in Iran, we see a worst-case scenario where prices could hit USD 150/bbl. Containerised freight rates cooled further in October and reliability picked up.
Where to go from here
Stefan VogelGeneral Manager – RaboResearch Australia & New Zealand Read more
Angus Gidley-BairdSenior Analyst – Animal Protein Read more
Michael HarveySenior Analyst – Dairy & Consumer Foods Read more
Emma HigginsSenior Analyst – Agriculture Read more
Pia PiggottAnalyst – Associate Analyst Read more
Vítor Caçula PistóiaAnalyst – Farm Inputs
Edward McGeochAssociate Analyst – Agri Commodities
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