Rabobank Australia and NZ Agribusiness Review

Rabobank Australia and NZ 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:

• In New Zealand, spring has come early, with soil moisture expected to be normal to below normal for most regions. In Australia, following a very dry and warm August in northern New South Wales and Queensland, last week’s rainfall came just in time for many cropping farmers. The Australian Bureau of Meteorology has forecast a lacklustre finish to the year, with the exception of Western Australia, where the outlook is for a wetter-than-average spring.

• The New Zealand Treasury upgraded its economic view this week, with GDP growth expected to return to positive territory in the present quarter Unemployment is also now expected to peak somewhat lower than previously forecast. For the Australian Economy, the highlight of last week was the June quarter GDP result. It showed Australia has indeed been ‘the lucky country’ in this global downturn. With regard to interest rates, the release of recent retail sales and employment data indicate a pre-Christmas rate hike by the RBA is not the ‘done deal’ that market pricing implies and many in the markets think it is.

• Global dairy prices continued to move upwards through August. USDA surveys suggested the price of all major dairy commodities rose through the month, varying from 3% for cheddar to 28% for WMP (four weeks to 3 September).

• Farm gate bull beef prices in New Zealand eased over the past month reflecting subdued offshore markets. Farm gate lamb prices have generally held steady over the past month in New Zealand, with limited volumes remaining for processing. Prices were around 20% (NZD1.00/kg) higher than for the same period last year. In Australia, young cattle prices were expected to rise seasonally through August, but dry weather conditions, subdued demand in export markets and the relatively strong Australian dollar has resulted in prices falling to AUD3.15/kg cwt at the end of the month, a drop of 8% compared to the same time last year. Lamb prices fell in August, with the Eastern States Trade Lamb Indicator ending the month at AUD4.27/kg cwt, compared to AUD4.55/kg cwt at the same time last year.

• World grains prices continue to grind their way lower; the CBOT wheat nearby contract price is now trading at just above USD4.30/bushel - its lowest level since the start of April 2007. Unless there is a major Southern Hemisphere production shortfall, there are few reasons to expect a rally in global wheat prices in late 2009 and early 2010.

• The Baltic Dry Index has flattened out and oil prices are trading in a range between USD65-USD70/barrel.

To view the full report, please click on the link below:

Australia and New Zealand Agribusiness Review

ENDS

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