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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 month of April saw mixed results for the beef market. Cattle prices stabilised, indicating a return to normalcy and support for prices at current levels. However, there was a decline in live cattle exports, and cattle on feed numbers remained relatively steady. Export volumes to key markets such as the US, South Korea, and China saw significant increases compared to the previous year. Overall, the beef market is cautiously optimistic, but the large volumes in storage in China and soft consumer markets pose challenges. The upcoming season's milk price is expected to be lower than the current high levels, but historically elevated milk prices will still support farmgate margins. The decline in milk production in Australia moderated in March, with stability seen in Western Australia and growth in Tasmania. However, eastern Victoria experienced the largest volume falls. Oceania commodity returns showed resistance in April, with year-on-year commodity prices down significantly. Live dairy exports to China underwent a major change, potentially impacting the demand for heifers from Australia. CBOT Wheat and Corn prices declined in April, while Soybeans remained mostly unchanged. The successful operation of the Black Sea grain corridor and strong Russian wheat exports cooled wheat prices. However, EU disunity on Ukraine's western border and threats from Russia create upside risks. Canola prices increased, particularly for Australian non-GM track prices. Fertiliser markets showed different paths, with nitrogen prices rising due to increased demand, while phosphate and potash markets sustained similar fundamentals with oversupply. The Australian food price inflation eased but remained elevated, with mixed results across the food basket and deflation observed in lamb prices.

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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.

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.

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