Australia Agribusiness September 2022: Good Reasons To Stay Positive

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: Despite a marginal MOM revision down, we still expect global G&O prices to trade 40%-50% above five-year averages into Q3 2022. Locally, carry-over and growing confidence in another large crop will weigh on prices over harvest.

- Dairy: Global dairy markets continued to trend lower in August, as underlying fundamentals turn slightly negative. Early signs of milk supply recovery in the export regions is evident, while demand signals are softening. A key driver of global markets will be Chinese import demand. Rabobank expect softer demand through into 2023.

- Beef: Favourable seasonal conditions have meant a drop in cattle numbers through saleyards and, together with falling cattle prices, this has stimulated demand. While supplies are limited, we expect prices to remain strong but we feel further upside is limited.

- Sheepmeat: Lamb prices recovered as plants came back online in August. With ongoing favourable conditions in export markets (except lower volumes to China) we believe lamb prices should hold through September before starting to dip as new season lambs arrives.

- Cotton: With a tightened, and still risk prone, supply base in 2022/23, and despite a bleak economic outlook, global prices are likely to be lower, but still favourable in 2023, and locally remain above the five-year average.

- Wool: An expected decline in economic activity dims the wool price outlook.

- Downstream Markets: Food markets remain very dynamic. There are ongoing pressure points across the food supply chain. Which are taking time to recede. Food inflation remains at decade-highs. With the risk of more to come. There are early warning signs of a consumer response to the cost-of-living issues, which will continue to build.

- Farm Inputs: Rabobank sees substantial upside risk for global urea prices moving towards the end of 2022, particularly in the wake of natural gas prices reaching a record-high in Europe. This is expected to renew upward pressure on local prices.

- FX/Interest Rates: The RBA will have to push more interest rate hikes, likely moving the official cash rate up by at least 0.35 basis points, maybe even another 50 basis points, in early September, with likely more hikes to follow. AUD to remain volatile.

- Oil/Freight: Looming economic conditions have softened prices for oil and freight. Brent crude hovered between USD 95-USD 100/bbl this August. Global freight rates continue to decline for most routes while reefer rates remain elevated.

  • Stefan Vogel

    General Manager – RaboResearch Australia & New Zealand
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  • Cheryl Kalisch Gordon

    Senior Commodities Analyst
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  • Genevieve Steven

    Analyst – Agriculture
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  • Angus Gidley-Baird

    Senior Analyst – Animal Protein
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  • Dennis Voznesenski

    Analyst – Agriculture
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  • Michael Harvey

    Senior Analyst – Dairy & Consumer Foods
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  • Emma Higgins

    Senior Analyst – Agriculture
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  • Pia Piggott

    Analyst – Associate Analyst
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