Rabobank Agribusiness Review March 2012

Agribusiness Review

March 2012

Please find attached Rabobank’s latest Agribusiness Review for Australia and New Zealand.

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:

• In New Zealand, the outlook for autumn points to normal to above-normal rainfall in the north and east of the North Island and the north of the South Island, with near-normal rainfall likely across the remainder of the country.

• Recent policy measures have averted a near-term credit squeeze in Europe, although doubts linger over the sustainability of Greece’s debt obligations. The US economic recovery has shown further signs of progress, although the all important housing market remains under a significant cloud. In local markets, ongoing improvement in the New Zealand economy is evident in both the business and household sectors. The Australian economy remains patchy with past rate cuts still yet to transmit to any great degree.

• The NZD is expected to soften slightly as the US dollar strengthens, albeit to remain elevated. The AUD remains strong against the USD, although it is expected to soften over the next three months on the back of a strengthening US dollar, but to remain above parity for the foreseeable future.

• Strong global supply is weighing on the dairy market, with international dairy commodity prices down across the board. Milk production in New Zealand and Australia is particularly strong, on the back of favourable seasonal conditions, with milk flows tracking above last season’s levels. Global demand remains patchy, with weak retail sales in the US and several key EU markets.

• Farm input prices remain supported by firm fundamentals, with oil prices trading around USD120/barrel.

• The global grains market remains pressured by high stocks, despite the market responding to the temporary decline in exports out of Europe and the Black Sea region on the back of the winter freeze. Australian wheat values continue to be heavily discounted against other origins reflecting ample local stocks, with little respite anticipated on the back of strong domestic production expectations for the 2012/13 crop.

To view the full report, please follow this link:

Australia and New Zealand Agribusiness Review

ENDS

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