NAB Commodities Index shows no light at end of tunnel for northern Victorian farmers

By Rodney Woods

Tough seasonal conditions and unfavourable weather in Western Australia have offset resilient cattle and lamb prices to see the National Australia Bank Rural Commodities Index fall by one per cent in September.

The NAB Rural Commodities Wrap shows frost, heat and dry weather in Western Australia and South Australia have affected winter crop conditions and will place forecast yields under pressure.

NAB agribusiness economist Phin Ziebell said cattle and lamb markets remained reasonably sound despite these challenging seasonal conditions.

“While the Eastern Young Cattle Indicator (EYCI) has dropped to 468¢/kg, this represents a fairly resilient price amid drought conditions,” he said.

“Premiums for quality finished cattle remain due to short supply, and poor conditions in many areas are ultimately a brake on prices.

“Continued elevated female slaughter points to a herd in liquidation mode.“We don’t expect much upside for the EYCI unless NSW and Queensland see some very good rain.

"Mr Ziebell said lamb prices had retreated somewhat from their record peaks earlier this year but remained strong, sitting at 795¢/kg for trade lamb.

"Looking ahead, we are cautious as to whether lamb prices will sustain these levels throughout spring, although there is a possibility that supply will remain constrained, keeping prices elevated,” Mr Ziebell said.

The Bureau of Meteorology’s three-month rainfall outlook points once again to below average rainfall for most of the country, while temporary water prices in the Murray-Darling Basin continue to surge, sitting about $700-$800/Ml, reflecting declining inflows and very low allocations.

“This will continue to put pressure on northern Victoria irrigated dairy, with input costs an ongoing concern,” Mr Ziebell said.

“However strong farm gate prices and a good season has seen confidence return to south-west Victoria, and to a lesser extent, Gippsland.

“Farm input prices are in an interesting position at present, with the lower Australian dollar and dry season likely to put upward pressure on input costs, while the impact of recent attacks on Saudi oil refinery infrastructure saw oil prices spike almost 20 per cent,” Mr Ziebell said.