Agribusiness Review

Agribusiness Review
May 2011

Please find attached Rabobank’s latest monthly Agribusiness Review for New Zealand and Australia.
Prepared by the bank’s Food & Agribusiness Research and Advisory division (FAR), the report provides monthly commentary on New Zealand and Australian agricultural conditions.

Key highlights:
The past month was wet in the North Island of New Zealand – very wet with storms in some parts - and on the east coast of the South Island. Late autumn and early winter is shaping up very well across New Zealand as a result. Australia also had another wet month in April, and the seasonal outlook is for New South Wales and Queensland to have ongoing wet weather. Other regions are expected to experience average conditions, with a chance of drier-than-average conditions in southern Victoria and northern Tasmania.

Fiscal policy and inflation – largely driven by high food and energy prices – have been the main features of the global economy over the past month. Consumer and business confidence appears to have stabilised in New Zealand, but the outlook is still very flat. In Australia the news is mixed: the unemployment rate has fallen; but the housing market remains subdued and consumption is flat; and inflation is rising.

The NZD has also strengthened and is now trading above USD0.80. The AUD remains strong against the USD and has reached new record levels in recent days.

Beef prices in New Zealand and Australia remain very strong, although have come back from their record highs of earlier this year. The elevated levels of the NZD and the AUD have not helped, but the short supply position continues to support strong prices. Lamb prices reached new records in New Zealand in early April, but retreated from their record levels in Australia. Again, the tight supply situation is driving prices.

Global dairy markets have tracked sideways for the last month or so. Production continues at strong levels in Australia and New Zealand, where autumn has been very favourable, and in the Northern Hemisphere milk flows are tracking above last-year levels. Strong demand is still absorbing production, maintaining prices at elevated levels.

Global grains markets stabilised in April following large swings in March, but are now seeking direction in a weather-dominated market; tight stock positions mean prices will remain volatile. The Australian winter cropping season has started, with dry conditions in parts of Western Australia, and favourable conditions prevailing in southern and eastern Australia.

Oil prices continue to respond to geopolitical concerns in North Africa and the Middle East, trading above USD120/barrel.

To view the full report, please follow this link:
Agribusiness Review for New Zealand and Australia

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