News - Australia Articles

Cattle distribution across Australia revealed

Australian agricultural commodity prices have experienced a downward trend, with beef, dairy, and grain prices all being affected. The decline in prices comes despite favourable seasonal conditions but can be attributed to elevated input costs and rising interest rates globally. While input costs have stabilized for now, the fertiliser index saw a 7.5% increase in August, posing a challenge for producers. Additionally, the formation of a third consecutive La Nina event, with a 70% chance, could further impact agricultural conditions. The dairy sector has seen a decline in global trade auction results, but farmgate prices remain strong due to competition among processors for milk. However, there is a risk of margin squeeze for processors in the coming months. Grain prices have been influenced by higher interest rates and global recession fears, causing fluctuations. Extreme weather events in key growing regions and the potential for a La Nina event have added pressure to the global supply picture. Australian grain prices have been relatively stable compared to international spikes, and favourable seasonal conditions are expected to lead to an above-average crop. Beef prices experienced a crash in June and July but have rebounded recently. Although seasonal conditions remain supportive, a weaker global growth outlook and high input costs have affected sentiment. Lamb prices have been falling, and the market may experience downward pressure with the upcoming spring flush. The wool market has seen flat to lower prices after a decline in the price run-up. Overall, prices for beef and lamb remain historically high, although the recent decline in prices has surpassed expectations.

‘Significant increase’ in demand for livestock finance

The Bureau of Meteorology (BOM) has raised the La Niña alert with a 70% chance of La Niña developing this spring in Australia. The outlook predicts above-average rainfall for most of Northern, Central, and Eastern Australia, which is favourable for beef production. However, below-average rainfall conditions are expected in Western Australia and western Tasmania. The cattle market saw a correction in prices in August, with cattle prices dropping and opportunistic traders re-entering the market. Saleyard numbers were low, indicating strong producer demand and the expectation of sustained strong prices. The Oceania dairy commodity complex, including Australia, experienced falling prices in August, with declines in milk powders leading the way. China's import demand has slowed, impacting global dairy demand signals. Australia's milk supply also declined in the 2022/23 season due to industry consolidation and unfavourable weather conditions. Rising dairy prices in retail and foodservice channels, along with cost-of-living pressures, have hampered end-user demand in price-sensitive emerging economies. The New Zealand spring peak is expected to bring more milk this season, which will influence the global market balance and commodity price direction. The grain market has seen volatility in prices, influenced by various factors. The Indian Ocean Dipole (IOD) has moved negative, increasing the chances of above-average winter-spring rainfall in Australia. Soil moisture is above average in many parts of the country, with flood risks remaining for Eastern Australia. CBOT wheat, corn, and soybeans prices finished mixed in August, influenced by dryness in the US, EU, and China. Rabobank has marginally downgraded its CBOT wheat price forecast but still expects prices to remain above average due to below-average global stocks. Canadian and Australian crops are expected to contribute to large canola harvests, affecting prices and exports.

Depleted supply contributing strongly to young cattle price hike

The Bureau of Meteorology (BOM) predicts above-average rainfall for most parts of Australia this winter, except for Western Australia and western Tasmania, which are expected to have average or below-average rainfall. The BOM's seasonal outlook also indicates a high chance of exceeding median rainfall on the east coast between August and November, which could benefit crop growth. However, the increased rainfall also poses a risk of flooding. Cattle prices have been declining, with many now below year-ago prices, leading to reduced buying activity. Slaughter numbers are slowly increasing, but processing capacity constraints persist. The Oceania dairy commodity complex experienced mixed results in July, with cheese prices showing the smallest declines, while milk powder and butter prices fell by around 10%. Milk supply in Australia and New Zealand has been affected by poor weather conditions, leading to decreased production. China's dairy market faces challenges, including elevated inventories and concerns about demand. Farmgate milk prices in Australia remain at record levels, providing some stability for dairy businesses despite global uncertainties. Rabobank expects above-average global grain prices, with CBOT wheat prices forecasted to trade within a certain range over the next 12 months. However, Ukraine's grain exports faced disruptions due to geopolitical tensions with Russia. In Australia, the winter crop area is expected to be slightly lower than the previous year, with reductions in NSW and Queensland due to excessive rain and waterlogging. The harvest season may bring downward pressure on prices due to a large crop, significant on-farm grain volumes, and congested port zones from the previous year. The nitrogen and Agri-chemical markets are influenced by factors such as gas prices, supply and demand issues, and changes in pricing for key ingredients.

The Australian beef industry has faced multiple challenges, including a drop in prices and struggling export markets. The decline in the Eastern Young Cattle Indicator (EYCI) was driven by concerns over Foot-and-Mouth Disease (FMD) entering the country, but other factors have exacerbated the market's vulnerability. The low number of cattle being processed and, in the saleyards, coupled with the influx of US beef on the international market due to drought in the United States, has contributed to the volatility in prices. Australian beef exports have been significantly lower than in previous years, and there are no signs of a quick recovery in major markets. Canola prices have skyrocketed due to a shortage caused by drought in North America and export bans resulting from the war in Ukraine. However, recent weeks have seen a decrease in canola prices, and producers are uncertain about the future market outlook. While global vegetable oil supply and demand are expected to return to normal in the upcoming year, high crude oil prices will continue to exert upward pressure on vegetable oil prices. The Indonesian government's actions to reduce domestic cooking oil costs have resulted in a surplus of palm oil for export, leading to a drop in palm oil prices. The conflict in Ukraine has disrupted the global grain and oilseed sector, causing record-high grain prices and raising concerns about food security. Australia's position as a major grain exporter, particularly for wheat, barley, and canola, has been highlighted during this crisis. Australia's exports contribute to global food certainty and security, as the country supplies quality grain during the opposite season of major Northern Hemisphere exporters. Ongoing uncertainty and poor crop conditions in the Northern Hemisphere are expected to drive strong demand for Australian grain exports. Australia's share of overall barley and canola exports continues to rise, emphasizing the global importance of the country's crop. Despite some months remaining until harvest, forecasts indicate that Australia is on track to produce a near-record crop for the third consecutive year.

Australian agriculture hit $70 billion in value last year

Australian beef prices have experienced a sharp decline since mid-June, attributed to various factors such as rising input and transport costs, higher interest rates, global growth uncertainties, and staff shortages due to COVID-19. Despite supportive seasonal conditions, the market remains uncertain. However, prices still remain relatively high compared to historical and international standards, with a forecast for prices to remain above pre-2020 levels into 2023. Global dairy trade auction results have been decreasing, although farmgate prices are generally strong due to high demand and competition for milkflow. However, this poses a risk of margin squeeze for processors. The wool market has seen some weakening before the winter recess. Overall, the dairy sector is experiencing challenges amidst higher interest rates and concerns about a global economic slowdown. Grains, particularly wheat, have been affected by rising fears of an economic downturn and uncertainties related to geopolitical events such as Russia's invasion of Ukraine. Wheat prices have dropped, although they remain elevated compared to pre-February levels. The global supply picture for grains is mixed, but demand fundamentals remain strong. Australian seasonal conditions are mostly supportive, and the country is expected to have an above-average crop this season. Australia is likely to remain a key supplier in the global grain market due to ongoing demand and limited impact from lower global growth.

Export beef customers raising concerns, following yesterday’s inaccurate FMD publicity