News - General Agriculture Articles

Over the coming three months, the beef market in New Zealand is expected to face some challenges. Normal or above-normal rainfall is likely in the north and west of both islands, while the east coast of the North Island may receive normal rainfall levels. Soil moisture levels are predicted to be near normal for the east coasts but below-normal for other parts of the country. Despite this, the beef industry has been resilient, with strong export volumes to China and the US. However, the ongoing revitalization plan in China and the slowing US economy could impact future beef imports. Farmgate beef prices have remained firm, supported by demand tension between the two key markets. New Zealand's dairy industry is experiencing a rebound in milk supplies after a wet summer and weaker comparables from last year. Milk production in March 2023 increased by 0.3% compared to the previous year, and national milk production for the 2022/23 season is down 6.2% compared to the previous season. However, there is a major change coming for dairy cattle exports into China, as New Zealand live dairy exports by sea freight will cease, impacting Chinese buyers. Opening farmgate milk price forecasts for the 2023/24 season are eagerly anticipated, and while global supply and demand fundamentals are weaker, increased import demand from China and the US in March has provided some optimism for the dairy industry. The global commodity markets, including grains, saw a softening trend in March but showed signs of optimism by the end of April. In New Zealand, the grain market is affected by factors such as oil production cuts, changes in China's fertiliser export quota, and a rebound in US demand. The phosphate and potash markets have been sustaining similar fundamentals, with global supply exceeding demand. Urea prices experienced volatility, with the US market showing increased buying and shipments due to corn planting ahead of schedule. The non-official increase in China's fertiliser export quota scheme could further impact global supply. Overall, the landing track for farm input prices is uncertain, and various factors need to play out before a new price level is established.

The US cattle market started the year on an uptrend due to tighter supplies, resulting in higher prices for all classes of cattle. Despite concerns about demand, better overall demand supported the market. Wholesale beef demand, although down compared to last year, remained the second highest in the last 20 years. The USDA quality grade improved, with a higher percentage of steers and heifers grading as USDA Prime and Choice. Canada experienced a decline in cattle supplies, pushing prices to record highs. Meanwhile, Mexico's cattle market showed a mixed picture, with ample production but relatively subdued domestic beef demand. US milk production saw growth in the first two months of the year, supported by an increase in the dairy herd and improved milk per cow gains. However, weekly dairy cow slaughter rates increased, potentially limiting significant herd expansion. Dairy product prices remained high, with the dairy products Consumer Price Index (CPI) well above prior-year levels. Despite some moderation in February, total dairy exports remained strong, particularly to Mexico. Global dairy product prices trended lower due to ample supply and sluggish demand. Initial estimates for corn planting intentions suggested a 4% increase compared to last year. However, weather changes during the planting season could impact actual acreage. Corn yield estimates varied, with weather being a major factor. Corn stocks were lower compared to the same period last year, indicating robust demand and the potential for basis strengthening. Corn exports declined, but outstanding sales showed increased interest in US corn, particularly due to challenges in Brazil. Overall, corn prices will be influenced by yield and demand factors throughout the marketing year.

The Australian beef industry is facing challenges in attracting labour, which may impact cattle volume purchases and prices. However, there may be a degree of restocking activity in the market due to a reasonable weather forecast and increasing confidence among producers. While beef exports have been sluggish, there are optimistic signs for later in the year, particularly in the China and US markets. The Australian cattle herd is forecast to reach its highest level since 2014 in 2023, driven by a strong growth rate. However, prices may not rise significantly due to the struggle to attract labour in the meat processing sector. Global dairy supply is growing steadily, with strong production from the European Union. Global prices have dropped significantly from their peaks in March 2022, and the Global Dairy Trade (GDT) auctions have seen a series of price declines. Weak consumer demand in China and concerns over future consumption have contributed to the decline in global dairy prices. Domestically, Australian milk production continues to fall, impacting the export surplus and putting pressure on margins for export-oriented processing. While higher domestic prices maintain profitability for producers, volatility and production costs are high. The Australian cropping sector is potentially poised to see its third record harvest in a row, with the overall winter crop and production volumes for wheat, canola, and lentils potentially reaching record levels. However, heavy rains in late 2022 will strongly impact crop volumes from New South Wales, which are likely to be markedly down. Pulse crops are also expected to see reduced volumes, partly due to reduced plantings as growers focus on major crops. Prices for major crops are down from last year's highs, and the reasonable production forecasts from the Northern Hemisphere are expected to limit substantial price increases. Australian grain growers may face high crop input costs but are still likely to plant a large crop given the reasonable weather outlook.

Australia’s Jan wheat exports surge 25pc to 3.3Mt

The beef market has experienced some stabilisation, with current prices expected to be sustainable for all operators in the supply chain. Feeder steers and young restocking cattle, however, have continued to drop in price. Good rainfall in Queensland has the potential to stimulate market activity and support prices. Cattle slaughter volumes have shown mixed results across different regions, with increases in some areas and declines in others. Additionally, exports to major markets, including China, have seen an increase, but live cattle exports to Indonesia have decreased significantly. The recent atypical BSE case in Brazil, leading to a suspension of beef trade with China, may have a positive influence on Australia's beef market but is not expected to have a significant impact. Dairy commodity markets have experienced a sustained downturn, with spot prices falling between 20% to 40% since their peak in Q2 2022. Milk production growth outside of Australia, particularly in the Northern Hemisphere, is gaining momentum, which may have implications for global dairy markets. Adverse weather conditions and industry consolidation have affected milk production, although the rate of decline has slowed in some regions. Dairy farmers are entering autumn with good feed reserves, but issues around fodder availability and elevated feed costs persist. Consumers' purchasing behaviour is shifting due to rising dairy product prices, and while dairy consumption remains resilient, volume declines are being observed. The Bureau of Meteorology's rainfall forecast indicates a potential shift from oversupply to a dry year, which may impact grain markets. The Black Sea Grain deal between Ukraine and Russia, up for renewal in mid-March, could have notable upside if not renewed. Seasonal conditions in the US have improved for central growing regions, while the ongoing Ukraine-Russia conflict and crop performance in Argentina may also affect grain demand and supply. Fertiliser prices have been declining, but the market remains uncertain about price behaviour after the spring buying period. The recent currency dip has not sufficiently countered international grain prices in AUD terms.

The weather forecast predicts wild weather in New Zealand, including an increase in tropical cyclones, which could bring more rain and strong winds to certain regions. This could lead to higher humidity and animal health risks for livestock farmers, including fly strike, worm burden, and facial eczema. Additionally, global beef prices are expected to be influenced by tightening supplies and weakening consumer demand. While beef production is expected to increase in Australia and Brazil, US production is forecasted to decline, resulting in tight global beef availability. New Zealand may see a lift in US import demand for beef towards the end of 2023 and into 2024. New Zealand's dairy industry is experiencing improved milk supplies at the beginning of 2023, with better grass growth compared to the previous year. However, farmgate milk price forecasts have faced downward pressure, and commodity prices have been losing momentum since mid-2022. Chinese importers are more cautious with purchases, and there is demand rationing in all markets. While the start of the new season may see some improved pricing, farmgate milk price forecasts are likely to be less optimistic than the previous season. The supply and demand balance for fertilisers have been shifting, impacting grain production. The fertilisers market experienced hikes due to COVID-related disruptions and geopolitical tensions, but with increasing stocks and reduced international prices, the outlook for 2023 is more favourable. However, the ongoing war between Ukraine and Russia and energy crisis may affect fertilizer application rates and overall grain production. The Baltic Panamax index, a proxy for grain bulk freight, has declined, mainly due to soft Chinese demand and Brazilian rainfall. There may be a soft rebound in the grain market in the second quarter of 2023 as temporary challenges resolve.

Australian agricultural commodity prices have experienced a downward trend, with the NAB Rural Commodities Index falling 6.6% in December and an additional 5.8% in January. Beef and grain prices have been major contributors to this decline, with wheat dropping significantly in late 2022 and cattle prices continuing to fall. Looking ahead, grain prices are expected to remain moderately lower, and the livestock sector, particularly cattle, faces challenges such as higher turnoff, processor constraints, and difficult global conditions. In the dairy sector, global dairy trade auction results have been negative, posing challenges for Australian processors due to high farmgate prices. However, returns at the pre-farmgate level remain strong for now. Cotton prices have stabilized in the new year, while sugar prices have shown moderate gains. The oil market outlook and supply concerns are expected to drive prices in the coming months, with prices likely to remain elevated. The global economic outlook remains uncertain, although recent data have surprised on the upside. Inflationary pressures persist, leading to a more hawkish stance by the Reserve Bank of Australia (RBA). NAB predicts 25 basis point rate hikes at each of the next three RBA meetings, with rates peaking at 4.1% in May. Despite some positive economic indicators, the Australian economy is expected to grow below trend in 2023 and 2024, leading to slower consumption growth and weaker outlook for investment in housing and businesses. The unemployment rate is also projected to drift higher in the second half of 2023. Weather conditions in Australia have been mixed, with above-average rainfall in northern regions but a drier start in southeast Queensland, southwest Western Australia, Victoria, and Tasmania. The possibility of an El Nino developing this winter adds to the uncertainty, although the Bureau of Meteorology's latest outlook suggests a dry autumn for southern Australia. Farm input prices have been volatile due to various factors, including COVID-19, trade disruptions, the Ukraine war, and inflationary pressures. Fertilizer prices have been declining, while feed grain prices have retreated but remain above year-ago levels. Cattle prices are undergoing a sharp correction, dairy trade auction results are reversing, and wheat prices are expected to gradually ease with a higher Australian dollar forecast.

Australian agriculture had a remarkable year in 2022, with high commodity prices and strong production volumes. Beef, dairy, and grain sectors all experienced excellent to record prices, benefiting from favourable seasonal conditions and global market tightness. Despite challenges such as price volatility, supply chain issues, and elevated costs, Australian farmers achieved record-high farm income. However, it is unlikely that 2023 will replicate the exceptional performance of 2022, with lower prices expected due to a global recession and inflationary pressures. In the beef sector, production volumes are slowly recovering, and while cattle prices will be softer in 2023 compared to 2022, they will remain historically high. Import demand from China and the contraction of US beef production will play a crucial role in determining market dynamics. The dairy sector also anticipates positive margins in the 2023/24 season, with ample feed availability and favourable seasonal conditions. However, ongoing recovery from flooding remains a challenge. The grain market is facing a shift in supply and demand dynamics, with historically low global stocks and increased political involvement in the trade. While the west coast of Australia expects increased demand for canola, the rest of the year appears less exciting. Grain prices are projected to ease, with a divergence between wheat and corn markets. Reduced supplies from the Black Sea region, lower Australian crop yields, and dry conditions in Russia may contribute to rising wheat prices. In contrast, corn prices are expected to decline due to large supplies from Brazil and the US. Australian agriculture is well-positioned to navigate 2023, but with lower margins compared to the exceptional year of 2022. Climate extremes, inflation, geopolitics, and supply chain disruptions are among the challenges that farmers need to address. Adapting to changing consumer behaviour and improving sustainability practices are also key priorities for the industry. While uncertainties remain, the sector remains resilient and ready to seize opportunities in the coming years.

Australian cattle markets have experienced a recent decline in prices due to an abundance of young cattle supply and challenging conditions in the US market. Although prices have reversed in the past week, there are potential risks for further volatility in 2023. Despite this, overall beef prices remain above pre-2020 levels, indicating a profitable period for many producers. Global dairy trade auctions have shown a downward trend, posing challenges for Australian processors who are dealing with falling milkflow and high farmgate prices. While farmgate prices currently remain high, there are emerging downside risks for the 2023-24 season. However, it should be noted that the current disconnect between falling global prices and high farmgate prices is not expected to continue indefinitely. Australian wheat prices have significantly declined since mid-November, primarily due to easing concerns about Black Sea supply, a stronger Australian dollar, and a large domestic harvest. However, volatility is expected to persist due to tight global stocks and geopolitical concerns. Despite this, Australian domestic feedgrain prices remain higher than the previous year, and there is an ample supply of feed-grade grain in the Australian market for 2023. ABARES forecasts record-breaking wheat production, surpassing last year's record, along with substantial production numbers for barley and canola.

The Australian agricultural commodity prices have shown a slight increase in the past two months, driven by higher wheat and cattle prices. Despite the weaker global economic outlook, agriculture continues to experience elevated prices as buyers consider seasonal and geopolitical uncertainties. Seasonal conditions have been generally supportive, with a promising winter crop expected. However, recent floods have damaged crops in parts of eastern Australia, posing risks to crop quality. While prices and yields remain strong, input costs and market volatility remain challenging factors. Global monetary policy normalization is progressing rapidly, with the US Federal Reserve and the Reserve Bank of Australia (RBA) raising interest rates. This weakens the global economic outlook for 2023, with the expectation of further rate hikes. The Australian dollar (AUD) has fluctuated amid global economic uncertainty. Wheat prices have rallied due to global supply uncertainty and the breakdown of the Russia-Ukraine wheat deal, suggesting high prices may persist. Cattle prices have rebounded, but restocker demand and feed grain costs pose uncertainties. Global dairy trade auctions have shown lower results recently, and while farmgate prices remain high, downside price risks are emerging. Cotton prices have retreated from previous highs, but with favourable growing conditions, growers remain optimistic. Persistent global inflation pressures raise the likelihood of further rate increases, leading to a projected significant global economic slowdown in 2023. While the Australian economy has remained resilient, early signs of slowing are evident, particularly in labour demand indicators and consumption measures. The central banks are expected to continue raising rates in response to high inflation. The AUD/USD exchange rate has fluctuated, with forecasts of the AUD ending the year at around 65 US cents. Australia has experienced a wet year, particularly in south-eastern regions, which has generally supported crop production. The La Nina weather pattern is expected to continue for the next few months, bringing above-average rainfall to the eastern states. However, Western Australia is forecasted to have drier conditions than usual. Farm input prices have been increasing since 2020 due to various factors, and while there are signs of stabilization, they remain elevated. Oil prices have been volatile, impacted by global events, but forecasts suggest slightly lower prices in 2023.