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Strong Chinese demand supporting Australian feed grain prices: Rabobank

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The March edition of the Rabobank Agribusiness Monthly report sees strong Chinese demand continuing to support Australian feed grain prices.

The Rabobank Agribusiness Monthly provides timely information and analysis on agricultural conditions, commodity price updates and commentary on the latest trends and developments.

Strong Chinese demand for feed grains such as sorghum and feed barley is supporting Australian values. Stronger prices will likely drive higher planted acreage for wheat and barley over canola in Australia this year. New crop planting intentions are also expected to drive Australian and global prices in the grains and oilseeds market.

Beef prices are expected to ease through April as the lack of summer rains prevents herd rebuilding, and will continue to support large numbers of cattle on the market. Cattle slaughter and production numbers are high and strong growth continues in exports to the US. Exports to Japan are also high returning to five-year average levels.

Global dairy commodity prices have provided mixed signals over the past month as the February price rally proved overcooked. While near term prices are likely to remain under some pressure through Q2, a more sustainable price rally is likely to result as gradual tightening of the demand and supply balance occurs through H215.

Sheepmeat prices are expected to be a little mixed through April. Saleyard prices in 2015, despite starting high, have trended lower since February. Over the hook prices have remained firm through the beginning of the year indicating strong processing and export demand but lower restocker demand.

Projections for the Australian sugarcane crop in 2015 have been edged higher, with ABARES forecasting a 5-million tonne crop in 2015-16, representing the largest crop since 2006-07. The international sugar market has been under significant pressure through March. Currency and fundamentals continue to limit possible near term upside.

Despite the growing mood in the markets for another rate cut, the RBA is likely to hold fire; however, the bias remains towards a further interest rate cut in Q2 2015.

The complete Agribusiness Monthly March 2015 report is available on the Rabobank website.

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