Rural commodity index hits file excessive: NAB

ANOTHER month of strengthening commodity costs propelled the NAB Rural Commodities Index to its highest degree in 11 years of historical past, standing 12.6% above August 2020 ranges.

The NAB’s Rural Commodities Wrap launched right this moment reveals Australian agriculture continues to be the excellent news for 2021, with livestock costs reaching file highs and a file grain harvest clearly within the body.

NAB Agri-food economist, Phin ziebell, mentioned an ongoing rally in world markets had as soon as once more boosted grain costs this month.

“Canola costs look significantly spectacular, supported by a robust restoration in international oilseeds, partly as a consequence of labor shortages in palm oil plantations in COVID-stricken Malaysia and excessive warmth. in Canada, ”mentioned Ziebell.

“We are actually seeing Australian wheat costs round $ 350 / tonne within the December quarter, whereas we beforehand anticipated costs within the low vary of $ 300 / tonne.”

Prolonged lockouts

Mr Ziebell, mentioned that whereas the outlook was largely constructive, it was vital to contemplate the financial implications of extended lockdowns following COVID-19 Delta variant outbreaks.

“Since final month’s Rural Commodities Wrap, there was a marked deterioration within the pandemic state of affairs in New South Wales and to a lesser extent in Victoria and New Zealand,” he mentioned.

“Extended lockdowns are sure in New South Wales and presumably Victoria, persevering with to disrupt the restoration of COVID-19 in Australia within the close to time period.

“A big affect on exercise is assured and the NAB has forecast a contraction in gross home product of round 3 computer within the third quarter quarter on quarter, and expects the unemployment fee to drop from 4.6% at 5.6%, though there are apparent dangers of even larger. unemployment aside from measurement issues.

“It is very important word, nevertheless, that with key vaccination targets more likely to be met by the top of the yr, we count on exercise to rebound strongly in 2022 and we count on the speed of Unemployment will drop beneath 5% by mid-2022 and finish the yr at 4.4%.

Underperforming greenback

The Australian greenback (AUD) continues to underperform, falling beneath $ 0.72 final week, reflecting weaker international threat sentiment amid COVID-19 delta surges, stronger USD, questions progress in China and Australian bottlenecks.

“A decrease AUD is nice information for agricultural commodities, however a problem for agricultural enter prices which proceed to rise as a consequence of international markets and delivery price challenges,” Ziebell mentioned.

“Fertilizer costs have greater than doubled in a yr and elevated 7.1% final month alone. We proceed to see larger world costs for DIAP and urea, which, mixed with a decline within the AUD, proceed to push our fertilizer index north.

“Whereas oil costs have come down a bit over the previous month, delivery prices stay very excessive and there’s unlikely to be a respite anytime quickly.”

Supply: NAB

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