Reduced volatility in cattle markets and good rain in south-eastern Australia and the West Australian wheat belt saw the National Australia Bank Rural Commodities Index fall by just 0.1 per cent in May.
NAB’s Rural Commodities Wrap shows the Eastern Young Cattle Indicator stabilising just below 500¢/kg, after a period of volatility earlier in the year.
NAB agribusiness economist Phin Ziebell said the future trajectory of the EYCI remained very sensitive to rainfall.
‘‘Slaughter data shows the national herd in a liquidation phase through to April, although the break in south-eastern Australia and rain in northern Queensland could mitigate this,’’ Mr Ziebell said.
‘‘On balance, we see the EYCI sitting in the 400¢/kg region for the remainder of 2019, before recovering closer to 500¢/kg in quarter one 2020.’’
Lamb prices continue their record streak, with high export demand and tight supply bringing strong returns, supported by a historically good Eastern Market Indicator sitting near $18/kg.
‘‘We are cautious about lamb prices remaining at record levels, but a good winter in the south may prompt flock rebuilding and disrupt the traditional spring lamb flush,’’ Mr Ziebell said.
Global Dairy Trade auctions were lower in May, and input costs remain a challenge for irrigators in northern Victoria.
Despite this, stronger opening prices for 2019-20 are driving increased confidence, with Saputo opening at $6.80/kg of milk solids and Fonterra at $6.60/kg MS.
Seasonal conditions remain front of mind, particularly in northern NSW, south-east Queensland and the Darling Downs.
On a state-by-state basis, Victoria was the best performer on the index in May, recording a 2.2 per cent increase, while NSW, Western Australia and Queensland fell 0.3, 0.6 and one per cent respectively.