Agribusiness Review
November 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:
• October was cool and stormy over much of New Zealand. While in most areas of southern Australia, October was
drier-than-normal. Averaged across Australia, it was the tenth driest October on record. The Southern Oscillation Index
(SOI) remained within the neutral range throughout October, meaning the chances of entering into El Niño this year or
early next year are unlikely.
• Relative calm has returned to global financial markets over the course of the past month. On the economic front, the
United States (US) economy has indicated some positive momentum of late with the labour market consolidating recent
gains.
• The NZD and AUD both remain range bound at elevated levels against the USD. Current Rabobank forecasts expect both
currencies to remain firm at around current levels in the short-term.
• Through October international dairy commodity continued to strength in USD terms, albeit at a slow pace. Global supply
across the key export supply regions is slowing in response rising feed costs, lower milk prices, and in some region
less than favourable weather. Seasonal peaks in milk flows for New Zealand and Australia have now passed.
• The last quarter of the year is traditionally the seasonal peak for slaughter rates in the United States. As has been
the case for most of 2012, dairy cow slaughter is driving up overall US slaughter as US dairy producers grapple with
high feed costs. The beef cow slaughter rate is sitting well below five year averages. The Eastern Young Cattle
Indicator (EYCI) finished October at AUD 341c/kg; down from AUD 360c/kg at the end of September.
• Global grains and oilseeds markets trended lower in October as US harvest pressure along with a lack of bullish news
helped improve market sentiment. The Australian harvest has progressed well with northern parts of the cropping regions
on both the east and west coasts rapidly nearing completion. Given global supply constraint export demand for Australian
grains and oilseeds is expected to remain strong into Q1 2013.
• Across the global fertiliser complex prices (in USD terms) remain relatively stable. Demand in South America is
cautious while export availability is limited by the closing of the low export tax windows. Global trading activity is
expected to pick up in the early stages on 2013 with large crop plantings expected in the Northern Hemisphere.
To view the full report, please follow this link: