Rabobank Agribusiness Review June 2009

Rabobank Agribusiness Review June 2009

Please find attached a link to Rabobank’s June 2009 Australia and New Zealand Agribusiness Review .

Prepared by the bank’s Food & Agribusiness Research and Advisory division, the report provides monthly commentary on New Zealand and Australian economic and agricultural conditions. Highlighted in this report:

• New Zealand experienced an early end to autumn and start to winter in May. Higher rainfall and temperatures up to 2°C colder than average were experienced in the month. Rainfall across Australia for May was, in general, below average.

• An improved global outlook, and hence improved sentiment towards commodity demand, pushed the New Zealand Dollar (NZD) and Australian Dollar (AUD) higher. Indeed, extreme pessimism has given way to a more balanced view of the world as the sharp decline in global output appears to be over.

• Australia avoided a technical recession by posting a positive Q109 GDP result (+0.4%) and the Reserve Bank of Australia kept the Official Cash Rate (OCR) on hold at 3%. Markets still are expecting one, if not two, interest rate cuts by the end of the year as unemployment is poised to rise. The Reserve Bank of New Zealand did not meet in May so the OCR remained on hold at 2.50%.

• In New Zealand, farm gate beef prices firmed 2-10% during May, despite the strong NZD. In Australia, rainfall in many cattle areas has been supportive of young cattle prices, with the Eastern Young Cattle Indicator rising to AUD3.22/kg cwt by the end of the month. This is seven cents above the same time in 2008.

• New Zealand lamb prices continued to move steadily higher, increasing 4-5% during May to add a further NZD 23-27 cents/kg to schedule prices Australian sheep prices continued to set new records in May, with the mutton indicator reaching AUD2.79/kg cwt at the end of the month, a massive AUD 87 cents above the same time in 2008

• Dairy commodity prices essentially stood still in international trade in May as the market continued to wait for signals that global dairy consumption was starting to recover. In New Zealand, the release of Fonterra’s forecast for its milk solids pay out for 2009/10 at NZD4.55/kg, down from NZD5.20/kg in 2008/09 added to the cautious tone.

• World grain prices advanced at a strong pace in May, with wheat the strongest performer. 2009/10 Australian wheat plantings are estimated at above 13 million hectares, but still slightly below that of last year. Production is estimated at 22.8 million tonnes.

• The Baltic Dry Index continued to garner strength from improvements in global trade and oil prices headed back toward USD70/barrel.
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To view the full report, please click on the link below:

Australia and New Zealand Agribusiness Review

ENDS

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