Spring rains lift prices to beef up confidence
RISING beef cattle prices on the back of good rains in Queensland and NSW have led to a lift in a rural commodities index.
National Australia Bank’s rural commodities index recorded a lift of 2.1 per cent in October.
The index, which tracks 28 rural commodities weighted by their relative size in the agricultural sector, is sitting on 128.6 after the first rise in five months, but still well down on the level of 139.5 recorded at the same time last year.
The major factor affecting the index over the past month was a rise in beef prices of 4 per cent, the first monthly increase for the industry since April this year.
NAB said lamb, fruit and vegetables also performed well, with prices rising 1.4 per cent, 6.3 per cent and 5.7 per cent respectively.
Wool also performed well in October, with prices generally rising 1.5 per cent over the month.
But grain prices remained “moribund”, driven by favourable growing conditions around the world.
Weather has an important influence on the commodity index as well as the exchange rate. The bank is forecasting the Australian dollar to fall to 75 US cents by year end and trade at US73c for much of next year.
NAB agribusiness economist and report author Phin Ziebell said dry weather in recent months saw cattle prices slide but recent rain had brought a dramatic turnaround.
“Still, we expect risks to cattle to continue to be on the downside after an extraordinarily good run,” Mr Ziebell said
He said the Eastern Young Cattle Indicator was now sitting on 575 cents a kilogram and rising, after reaching almost 500c/kg in September.
Cattle Council of Australia president Howard Smith said the recent rains had given cattle producers a chance to retain their stock and rebuild their herds.
“While some regions are still dry, it’s been a beneficial rain,” Mr Smith said.
“A lot of people are rebuilding their herds and if the season goes our way, then that will keep prices firmer.
“And the currency has come back a bit in recent times, so that has also helped.”