Australia and NZ Agribusiness Review From Rabobank

Please find attached Rabobank’s December 2009 Australia and New Zealand Agribusiness Review from Rabobank.

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

• November saw average to warm temperatures for New Zealand, with drier than normal rainfall resulting in soil moisture deficits below 50% of storage. The Southern Oscillation Index weakened slightly, though remains at levels typical of an El Niño event. The outlook for Australia is for average conditions into summer.

• The movement towards global economic growth has been confirmed by the release of national GDP data. Business spending and capital expenditure are expected to outweigh a softening of consumer spending to confirm the return to global growth.

• The economy is a mixed picture in New Zealand, with weak unemployment and consumer spending offset by a strengthening firms’ own activity outlook. The Reserve Bank of Australia increased the official cash rate by 25 basis points at its early December meeting, the first time it has increased rates in three consecutive months. The business investment outlook is positive although consumer spending has softened. Both the Australian and New Zealand dollars continue to trade at high levels.

• World grain prices saw modest gains during November, although these price movements are still not supported by the fundamentals with ample global grain stocks. Yield results in Australia are generally positive, although the stormy and dry weather have affected yields in some areas.

• Young cattle prices continued on a downward trend in Australia, with dry weather, the strong dollar and subdued demand in export markets the main drivers. New Zealand, by contrast, saw a slight upwards price movement during November, particularly in the South Island.

• International demand for dairy continued its upwards run through November, with prices climbing further, mainly as a result of supply constraints. The strength of the recovery in prices now raises concerns about the risk of overshooting levels that would be sustainable over the next 12 months.

• The Baltic Dry Index continued to trend upwards during November to year highs, before trending back down at the end of the month. Oil also saw gains during November that have kept it at year highs - it has consistently traded between USD75-80/barrel.

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

Australia and New Zealand Agribusiness Review

ENDS

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