Forecast of rain, better $A exchange rate
BEEF is certainly in the news, with record production and exports making headlines.
While a dry season in northern and western Queensland has increased supply and affected prices, it looks as if we will have a normal or better season in the months ahead.
The Bureau of Meteorology is forecasting a greater probability of above-average rainfall across most of the mainland for the next three months, particularly in the east.
There are a number of other positives at the moment.
For one, we’re not seeing any build-up of processed product.
On the export front, the increase in trade to China that we saw in late 2012 has continued, and China is likely to remain the most important emerging market for beef exports.
The United States is expected to be a strong market in the medium term, with domestic production anticipated to fall further this year. Australian exports to the US are forecast to increase by around 5% in 2013-14.
The falling AUD is also helping to support exports. While the AUD/USD rallied in the second week of August, NAB is forecasting a somewhat deeper and faster AUD depreciation path to 0.86 at the end of 2013 and down to 0.80 at the end of 2014.
Encouraging conditions all point to stronger returns in the coming 12 months and beyond.