Rain a key to 2019 production

By Country News

While 2018 will be remembered for below average rainfall, the smallest winter crop for a decade on the east coast, record high wool and lamb prices plus high feed costs, 2019’s main players will be rainfall, horticulture exports and milk production.

That’s according to Rural Bank’s Australian Agriculture Outlook for 2019, which says ‘‘the year ahead is likely to be one where production and prices depend heavily on rainfall’’.

According to the report, Australian cattle producers entered 2018 with intentions to retain and rebuild herd numbers but poor seasonal conditions forced producers to de-stock, which led to slaughter rates up 10.2 per cent for the year as of October.

The Eastern Young Cattle Indicator took a hit, dropping from a high of 567¢/kg in March to a low of 445¢/kg in August — the lowest since April 2015.

However, the average yearly price of 509¢/kg was still 15 per cent above the 10-year average.

With 2018 being a tough year for cropping, Rural Bank said in 2019, flow-on effects were likely to be felt.

‘‘If widespread rain eventuates in 2019, subsequent pasture rejuvenation and a move by livestock producers towards restocking may result in a reduced demand for feed grain,’’ the report said.

‘‘However, even with rainfall, the severity of the east coast feed grain deficit makes it difficult to see any meaningful changes to domestic supply and demand pressures until late 2019.’’

But even an average season this year would lift tonnage by 50 per cent on 2018 totals, the report said.

For dairy, Rural Bank is forecasting milk production to reach 9billion litres in 2018-19, cheddar prices for the first half of 2019 to be $4100/tonne and the average farm gate milk price to reach $6.10/kg of milk solids, just 14¢ below what it was before the 2016 price crash.

In horticulture, Rural Bank is expecting a ‘‘moderate’’ five per cent increase to the fruit price index for the first half of 2019.

It also predicts fruit exports will grow by 10 per cent due to increased citrus, stonefruit and cherry exports to China and Hong Kong.

The high prices of lamb and mutton are expected to continue into 2019 as the markets are forecast to be ‘‘characterised by tight supply and strong export demand’’.

Lamb prices topped at 884¢/kg in late August and averaged 684¢/kg in 2018, while mutton prices averaged 443¢/kg.

While 2018 was one of records for wool prices, reaching $2116¢/kg in mid-August, high prices could remain in 2019 as estimates suggest six to 10 per cent less wool will be produced in 2018-19, compared to the previous year.