Home > Rabobank Agribusiness Monthly May 2015: Grains prices supported, lamb exports up, oil rallies

Rabobank Agribusiness Monthly May 2015: Grains prices supported, lamb exports up, oil rallies

Supplier News

The latest Rabobank Agribusiness Monthly for May 2015 has many positives for the Australian market, primarily from strong grains prices and meat exports.

Report highlights

The Meteorology department has raised an El Nino alert; however, the May-to-July outlook shows wetter-than-average conditions across Australia.

Grains prices are expected to remain well-supported in Australia through 2015, as low carry in stocks along with strong demand for feed grains continues. Concerns about El Nino’s impact on the 2015-16 crops have raised local prices well above international levels.

Global dairy commodity prices continued to ease into May, with prices down 10 per cent over the past month, as buyers felt no urgency to return to the market. Prices are now 20% to 40% below the same time last year. Milk production continues to be robust across the world. Lower prices have also stimulated growth in some regions.

The beef segment brings positive news with increased slaughter numbers YOY, high saleyard prices and strong exports, especially to the US and South Korea.

Strong lamb exports to the US and the Middle East are offsetting a drop in Chinese demand and helping maintain price strength. While all lamb categories picked up on saleyard prices, mutton dropped from its April high but remains in line with 2014 levels.

The 2015 Australian sugar harvest at 33.75 tonnes is expected to result in the largest crush since 2007. Rabobank’s forecast through 2015 sees prices remaining subdued, reflecting the strong production numbers expected from Indian and Brazil.

Despite rain interruptions, the Australian cotton harvest is expected to show both quality and yield with production to be above 2m bales. Rabobank expects global cotton prices to further improve at modest levels through 2015.

In the wool segment, the EMI has strengthened some 6 per cent through the past month to AUc 1,240/kg clean, its highest level since 2012. A 15 per cent increase in US dollar terms over the month, and continued strong bale offerings may fund resistance in the market.

In other results, Australian wine exports increased by 3.6 per cent to 711m litres in the year to March 2015, the highest since early 2013; global urea prices remain below year-ago levels, despite rebounding somewhat in late April and early May; and oil prices rallied in April and early May, in spite of persistently high global supply and continued stock builds.

The RBA cut the cash rate again in May, while the recent reversal in the US dollar appears short-lived. 

Newsletter sign-up

The latest products and news delivered to your inbox