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New Zealand's beef export volumes have dropped below the five-year average due to delays in the supply chain caused by processing and retail challenges. The lockdowns in China have affected exports to the country, although consumers in Shanghai have been stockpiling beef. Competition from cheaper Brazilian imports has also led to a decline in prices. However, the farmgate beef price is expected to remain elevated during the winter months due to a tight global supply situation. Global dairy commodity prices have seen a downward trend due to weaker demand and the fallout from events in Ukraine and the COVID-19 pandemic. New Zealand's milk supplies have been lower compared to the previous season, driven by average weather conditions. Despite the challenges, dairy commodity prices are expected to remain volatile, with weak global milk supply supporting prices at elevated levels. Uncertainty in China, the largest importing country, may impact demand prospects. The Baltic Panamax Index, which serves as a proxy for grain bulk freight, is on the rise, indicating strong demand from state buyers. Global trade of grains and oilseeds is forecasted to increase after a slight decline in the current season. However, the growth rate remains lower than in previous years. Delays in shipping and congestion at ports have affected global trade, but the situation is expected to improve as congestion in Asian ports eases. The EU's ban on Russian seaborne oil imports may lead to increased fossil fuel prices, potentially impacting input costs for fertiliser and agrochemical manufacturing.

Australia's prolonged La Nina weather event, coupled with a negative Indian Ocean Dipole (IOD), is expected to bring above-average rainfall for much of the country's winter crop. While this presents upside potential for the 2022-23 Australian winter crop, it also raises risks to global grain production, posing challenges to global food security. Inflationary pressures are mounting, leading central banks, including the Reserve Bank of Australia (RBA), to raise interest rates. The resulting strengthening of the USD, along with ongoing COVID-19 lockdowns in China, creates higher volatility risks for the AUD. This situation poses challenges to the beef industry, as higher input prices and uncertain exchange rates affect global agricultural profitability. Global economic risks, such as the war in Ukraine and energy shocks, are adding to the overall uncertainty. Central banks' increasingly hawkish stance in response to rising inflation may lead to policy mistakes if rates need to be pushed above "neutral" levels. The convergence of multiple shocks impacting the global economy simultaneously raises the risk of a recession in a major economy, which could further affect the agricultural industries. The NAB Rural Commodities Index experienced its first drop since March 2021, but is expected to reach another record high in May. The surging global grain prices, driven by various challenges like Russia's invasion of Ukraine, droughts in Germany, France, and parts of Africa, and supply chain disruptions, pose both opportunities and risks for grain producers. Australian wheat is competitively priced compared to international benchmarks, making Australia a key source of grain in the coming year. Global dairy trade prices have dropped significantly in recent auctions but remain high by historic standards. Despite moderate losses, farmgate prices are expected to remain elevated. As for beef, while cattle prices initially eased, they have been on an uptrend. With a wet winter forecast and strong global food inflation, the downside risks for cattle prices seem less likely, at least for 2022.

Inflation in Australia has reached its highest level in a decade, prompting the Reserve Bank of Australia (RBA) to raise cash rates with more increases expected. Australian farmgate dairy prices have also reached new highs, and there is optimism for further upside. Oilseed prices, such as rapeseed and canola, have hit record levels, driven by factors like export bans and supply concerns. CBOT corn and cotton have also reached all-time highs. Fertiliser prices, particularly potash, phosphate, and sulphur, have hit new highs, while urea and ammonia prices weakened. Record container congestion outside Chinese ports due to Covid-19 lockdowns has raised concerns about higher container freight costs. Looking ahead, questions arise regarding Australian grain prices following global market increases, the continuation of record dairy prices, the future trajectory of fertiliser prices, and the number of RBA interest rate hikes. On the global scale, food price inflation has surged, with the FAO Food Price Index reaching its highest level since 1990. The war in Ukraine continues to impact grain and oilseed markets, driving prices higher. However, weather conditions and supply projections for wheat remain uncertain. In the dairy sector, mixed global commodity prices have been observed, with weaker demand affecting some products. Palm oil exports from Indonesia have been banned, contributing to elevated vegetable oil prices. In the beef industry, a decline in prices is expected due to factors like increased cow liquidation in the US, but overall food inflation in Australia has risen. Consumers may face higher prices, and innovation will play a role in improving consumer value. Globally, households are grappling with higher food costs and cost-of-living pressures. Fertiliser markets continue to be volatile due to the war in Ukraine and sanctions on Belarus and Russia. Potash and phosphate prices have risen, while urea prices experienced a temporary decline. The flow of fertilisers from Russia and Belarus has been impacted by geopolitical factors. Gas supply disruptions from Russia could further affect fertiliser production and prices in Europe.

New Zealand's exports were heavily influenced by the global protein shortage and increasing demand from China and the United States. The report indicates that beef prices are likely to remain strong, driven by limited global supply and robust consumer demand. Furthermore, the ongoing challenges related to climate change and environmental sustainability continue to shape the sector, prompting efforts to improve resource efficiency and reduce emissions. New Zealand experienced a favourable season with increased milk production. However, the report emphasizes the need for careful management due to potential challenges such as rising input costs and the volatility of global dairy markets. Market conditions remained positive, with strong demand from Asia and emerging markets. Additionally, the report highlights the growing focus on sustainability and the role of the dairy industry in reducing greenhouse gas emissions. New Zealand's grain industry faced mixed conditions during the period. Wheat production was negatively affected by dry weather conditions, leading to lower yields. In contrast, barley and maize production showed more favourable results due to increased demand for feed and alternative grain-based products. The report also emphasizes the importance of diversification in the grain sector, including exploring opportunities in niche markets and value-added products to mitigate market volatility.

Seasonal conditions for agriculture are generally good to very good, with many regions receiving the necessary rainfall ahead of planting. This is particularly beneficial for beef and dairy production, as it eases concerns about winter crop establishment. However, some areas, such as Tasmania, southwest Victoria, and parts of Queensland, still face dry conditions. Commodity prices remain elevated, although there are indications that some, including dairy, cattle, and sheep, have slightly decreased from their record or near-record levels. The NAB Rural Commodities Index is expected to record a drop in April, the first decline in 13 months. Inflationary pressures are mounting across the economy, impacting agriculture. Fertilizer and fuel prices continue to pose significant challenges. Labour costs are also experiencing upward pressure. The overall economic inflation, with the CPI hitting 5.1% year-on-year, is expected to lead to an increase in the cash rate by the Reserve Bank of Australia. Regarding beef production, while some areas have received adequate rainfall, concerns remain about regions such as central Queensland and parts of Tasmania, southwest Victoria, and south-eastern South Australia. The cattle prices, although starting to decline, are still elevated compared to historical norms. However, the sustainability of these prices is questioned, especially if a return to a "normal" or even below-average season occurs. In the dairy sector, global dairy trade auctions have shown moderate losses since mid-March. Despite the price declines, farmgate prices are expected to remain high compared to historic standards. The report also highlights the challenges of rising input costs and the importance of global production and unevenly distributed stocks in driving the surge in grain prices.

Milk supply in export regions, particularly New Zealand, has been declining, contributing to a global supply crunch. Rising costs of production and weather-related disruptions further exacerbate the situation. Despite strengthening global dairy commodity prices, the supply shortage may continue to impact export returns and result in higher food prices for consumers. However, the timely and record-high milk price offers from Australian companies provide some support for local dairy farmers. The beef sector is experiencing limited cattle availability due to dry conditions in northern Queensland and the Northern Territory. Below-average rainfall has led to increased cattle sales, particularly of younger and lighter cattle, and may result in a drop in young cattle prices. Abattoirs are facing challenges in managing available workforces, leading to longer wait times for processing. While beef export volumes remain low, there has been a slight increase compared to earlier months, but still below the five-year average. With ongoing supply constraints, the availability of live export cattle is expected to be more limited in the future. The war in Ukraine and ongoing geopolitical risks have driven grain and oilseed prices higher. The disruption in Russian and Ukrainian exports has led to global supply concerns. Sanctions and trade bans are expected to have enduring structural impacts on Russia's and Ukraine's grain production. Local wheat prices are expected to see limited upside due to congested export supply chains, while barley prices are likely to maintain recent gains due to a lack of global availability. Additionally, high fertiliser prices caused by the war in Ukraine are impacting the supply and energy front, posing further challenges for farmers.

Australian grain producers are facing challenges due to the impact of the Ukraine conflict, which has resulted in high grain prices, increased costs, and tight availability of inputs. The conflict has disrupted global grain trade flows and supply chains, with potential long-term effects on Ukrainian grain exports. The conflict's impact on grain prices may have indirect consequences for the beef industry, as high feed grain prices could affect the profitability of feedlots and other major feed users. This could lead to reduced profitability, decreased cattle numbers, or increased costs for beef consumers. Global dairy prices have experienced a slight decline in recent auctions after a strong start to 2022. This decrease is attributed to new COVID outbreaks in China and the country's zero-COVID strategy, resulting in a temporary drop in demand. However, globally, there is still strong demand and limited supply due to reduced production in New Zealand, the United States, and the European Union. Australian domestic production is also expected to be down this year due to seasonal conditions. Despite rising input prices, domestic dairy prices are expected to remain favourable, especially considering recent step-ups. Autumn is the planting window for Australian grains, but the next crop is not forecasted to match the record levels of the past two years. Domestic acreage for grains may see a slight decrease, particularly for wheat, although there should be increases in canola and pulses planting. Global grain and oilseed prices are expected to remain high due to uncertainty surrounding the impact of the Ukraine conflict on the region's grain production and exports. Australian grain producers may experience the impact of high prices, as well as the high cost and limited availability of fertilisers and other inputs. The conflict's effect on global grain trade flows and supply chains could have short and long-term consequences.

Record high North Island bull pricing and constrained global beef supply are supporting very high export pricing and demand. However, processing challenges and Covid-related lockdowns in China are limiting volumes available for export. Congestion and processor backlogs are anticipated for the remainder of the season. RaboResearch expects farmgate beef pricing to remain elevated through April but slowed economic growth and potential further lockdowns in China pose a risk to consumer demand. Milk supplies in key export regions, including New Zealand, Oceania, and Australia, have sharply declined. New Zealand milk production was down by 8.2% year-on-year in February 2022. Rising costs, labour shortages, unfavourable weather, and variable feed quality and prices continue to limit production. Farmgate milk prices have followed commodity prices higher worldwide, but the production response by producers is constrained. New Zealand milk production is likely to end the season lower than the previous year due to dry conditions in Southland and Waikato. The war in Ukraine and subsequent sanctions are impacting global grain trade. Russia, a major exporter of grains, has ceased exports, causing potential disruptions and reallocating products to alternative markets. The high prices and supply challenges are expected to continue throughout the winter and spring, with significant impacts on the supply of fertilisers. China's strict zero-Covid-tolerance measures are also affecting the domestic consumption and manufacturing output, which could further impact the grain trade.

Russia's invasion of Ukraine has had a significant impact on agricultural commodity markets worldwide. The invasion has disrupted old commodity trading routes and caused substantial increases in prices and volatility, particularly in the beef, dairy, and grain sectors. The uncertainty surrounding Ukraine's agricultural production has contributed to these market fluctuations. While western sanctions do not extend to Russian agricultural products, the global agricultural community is bracing for potential disruptions. In terms of beef, the rising input prices, such as fertilizers and diesel, have become a mounting concern for 2022. The ongoing La Nina event has brought destructive storms to certain regions in Australia, affecting beef-producing areas like Queensland and New South Wales. The fluctuating weather conditions have created a divide between wetter and drier regions, with some southern regions in need of more rain for the upcoming winter cropping season. Despite the challenges, high beef prices have offset some of the pressures faced by producers. The grain market has experienced significant impacts due to the Russian-Ukrainian conflict. With Russia and Ukraine being major global exporters of wheat, the disruption has caused high volatility and substantial rallies in global wheat prices. Although Australian grains remain under-priced compared to global benchmarks due to ample domestic supply and shipping limitations, the market is highly uncertain. Factors such as the extent of Ukraine's crop at risk, overseas growing conditions, and the US drought situation contribute to potential upside risks in the coming months. In the dairy sector, global dairy trade auctions have achieved record-breaking results, leading to high farmgate prices. The Russian invasion of Ukraine further adds to the volatility in grain markets, which indirectly affects the dairy industry. The situation poses both challenges and opportunities for dairy producers, as the ongoing market dynamics and global results could continue to impact farmgate prices. However, the high prices experienced in recent years may have peaked, and the industry could see a slight decline in prices. The agricultural commodity markets, particularly beef, dairy, and grains, are facing significant disruptions and uncertainties due to Russia's invasion of Ukraine. The conflict has re-established old commodity trading routes and caused price increases, volatility, and concerns over production. Producers are closely monitoring input prices, weather conditions, and global market trends to navigate these challenging times.

The ongoing conflict in Ukraine and Russia is expected to have minimal direct impact on global beef trade. Russia's role in global beef imports has significantly declined in recent years, accounting for only 2% in 2020. However, there may be indirect impacts such as higher costs for feed and energy. Cattle prices in Australia have been relatively stable, but there is a shortage of finished cattle. Slaughter numbers in 2021 were the lowest in 37 years, indicating a rebuilding of the herd. Beef exports from Australia have decreased, with volumes in January 2022 being the lowest since 2011. The milk supply situation in key export regions, such as the US and New Zealand, has been deteriorating. Poor weather in New Zealand and feed pressures in the US have led to a decline in milk production. As a result, Oceania commodity prices, including butter and cheese, have reached record levels. This firm commodity basket is expected to support milk pricing in Australia, and further upside in pricing is anticipated. Higher feed and fertiliser prices, along with increased energy costs, may limit milk supply growth and impact discretionary dairy purchases in emerging markets. Ukraine is a major export powerhouse for grains, oilseeds, fertilisers, and energy. The ongoing conflict and export disruptions in Ukraine have led to a halt in exports, which increases demand for grains from other regions, including Australia. Price volatility is expected to remain high, and the impact on 2022 crop production in Ukraine is unknown. The conflict has also led to heavy sanctions on Russia, which could disrupt Russian exports of grains, energy, and fertilisers. While a direct ban on Russian grain and oilseed exports is unlikely, indirect disruptions are occurring. The length of the war and the extent of the disruptions will be crucial to monitor.