The National Australia Bank Rural Commodities Index rose in May with prices up three per cent, largely reflecting favourable grain, horticulture, dairy, wool and cotton prices.
The latest NAB Rural Commodities Wrap shows wheat was the best performer, up 11.4 per cent, while cattle prices fell 5.6 per cent.
NAB agribusiness economist Phin Ziebell said the rain received in May had been enough to get winter crops in the ground in the south-east, but conditions were very tough across much of the country following another very dry month.
‘‘The dry weather conditions continue to be the major driver of elevated grain prices, with poor availability and no new supply expected until later this year,’’ Mr Ziebell said.
‘‘The NAB weighted feed grain price index was up 10 per cent in May, the highest level since it began in 2010.’’
Meanwhile, the dry conditions and elevated feed prices are likely to continue to dampen cattle prices.
‘‘Cattle prices fell 5.6 per cent in May, and the Eastern Young Cattle Indicator has fallen to its lowest level in three years, around 466¢/kg,’’ Mr Ziebell said.
‘‘If the weather stays dry, further downside is possible.
‘‘However, if normal conditions return we should see the EYCI back in the 500¢/kg range later in 2018.’’
The wool market continues its strong run, with the Eastern Market Indicator currently standing at 2027¢/kg (as of June 5).
‘‘This is an excellent return for growers, particularly those with finer wool,’’ Mr Ziebell said.
‘‘Export markets for lamb are reasonably diversified, with the US and China accounting for a substantial volume and it’s predicted this demand will continue to be strong this year.
‘‘Together, this means sheep and lamb slaughter could increase less than would normally occur in current dry conditions.’’
The NAB weighted dairy export price indicator was up 7.5 per cent in Australian dollar terms in May, largely reflecting better global auctions and a stable dollar.