Home > El Nino impact on agricultural markets discussed in new Rabobank Agribusiness Monthly Report

El Nino impact on agricultural markets discussed in new Rabobank Agribusiness Monthly Report

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Agribusiness banking specialist Rabobank presents the Agribusiness Monthly report providing timely information and analysis on agricultural conditions, commodity price updates and commentary on the latest sectoral trends and developments in Australia and New Zealand.

Key highlights of May’s Agribusiness Monthly include likely development of the El Niño-Southern Oscillation weather system in winter; Australian beef exports to remain strong; global wheat stocks to swell in 2014; large monthly sheepmeat exports; weather risk providing support for sugar markets; and global cotton stocks to reach record highs.

El Niño impacts climate across much of the world, causing below average rainfall in the western Pacific and Indonesian regions, and increased rainfall in the central and eastern Pacific. Agricultural markets will be paying close attention to the growing risk of an El Niño weather event and ultimately, the price impact.

April rainfall was above average over much of Australia. National rainfall outlook for the May to July period shows a roughly equal chance of a wetter or drier than normal season over the majority of Australia.

In food retail, monthly growth in Australian retail sales continued to soften in March 2014, rising 0.1% against the preceding month on a seasonally adjusted basis. Sluggish consumer confidence continues to show through in data in recent months.

Boxed beef exports in April dipped under the 100,000-tonne mark but still remained at historically high levels despite the large volumes processed since the start of 2013. The YoY rise is underpinned by rise in exports to the US (up 40%), China (up 19%) and Korea (up 26%).

Southern dairy export producers are responding to high farmgate prices and good seasonal conditions as the season draws to a close. Milk flows across the country were up 3.8% compared to last year in March. The result was supported by a jump in Tasmania (up 16.6%) and Gippsland (up 10.3%).

Total sheepmeat exports in Australia experienced a slight decline during April, but year to date April was 20% higher than the same time last year. High export volumes are supported by strong international demand and continued high slaughter levels during the first four months of 2014.

On the sugar scene, crushing is due to commence across the New South Wales cane growing areas from the end of June and current forecasts are for a 1.2 million tonnes harvest.

Australian wine exports have arrested their slide in China with bottled export volumes to the China/Hong Kong market rising by 14% versus the same month last year. Overall, Australian wine export volumes grew by 8% in March 2014 versus the same month last year, helped by a strong rise in bulk volumes to Canada and the UK.

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