In what is the biggest monthly gain since December 2010, strong wheat and cattle prices drove a 6.5 per cent rise in the National Australia Bank September Rural Commodities Index.
Released on October 15, results once again varied by state and commodity, largely due to mixed seasonal conditions across the country.
NAB agribusiness economist Phin Ziebell said challenging seasonal conditions in the eastern states had seen domestic grain prices hit extreme levels, with ASX wheat jumping 22 per cent to average $430/tonne.
‘‘Domestic grain premiums are banking on very limited eastern Australian supply and export,’’ Mr Ziebell said.
‘‘Tight volumes do look likely given the poor state of eastern winter crops, and there are associated concerns around the ability of livestock producers to absorb feed costs in drought conditions.
‘‘The national wheat production forecast is down slightly this month from 18.1million tonnes to 17.4million, reflecting downgrades in Western Australia, Victoria and South Australia.
‘‘That said, we still anticipate WA will deliver an above average result.’’
The index also revealed livestock prices have been mixed, with cattle prices holding up quite well but lamb falling slightly.
‘‘After a big increase in late August, the National Trade Lamb Indicator has come back to a similar level as this time last year, sitting at 697¢/kg,’’ Mr Ziebell said.
‘‘Wool has seen some weakness too, although EMI (Eastern Market Indicator) is now back above 2000¢/kg.’’
Cattle prices have remained resilient, with the Eastern Young Cattle Indicator up 6.1 per cent despite tough conditions, with the EYCI predicted to remain in the mid 400 to 500¢/kg range over the coming months.
‘‘Although there has been a big drop in demand for restocker cattle, these stronger cattle prices are reflective of the demand for finished cattle,’’ Mr Ziebell said.
‘‘However, if demand subsides and high US production continues, then we may see a further EYCI downside beyond drought-influenced domestic stocking levels.’’