ON THE LAND Bright out­look for agribusi­ness

The Free Press (Corowa) - - FRONT PAGE -

In Aus­tralian agri­cul­ture, 2018 will be re­mem­bered for be­low-av­er­age rain­fall, high feed costs, record lamb and mut­ton prices and the small­est grain crop on the east coast in nearly a decade.

As we head into 2019, Ru­ral Bank’s Ag An­swers in­sights team has turned its at­ten­tion to the year ahead for Aus­tralian farm­ers.

In the Aus­tralian Agri­cul­ture Out­look 2019, Ag An­swers has an­a­lysed the per­for­mance of six in­dus­tries – cat­tle, hor­ti­cul­ture, crop­ping, dairy, sheep and wool, plus the broader econ­omy – to pro­vide a fore­cast of what we can ex­pect in 2019.

“Drought and drier con­di­tions have af­fected large parts of the east­ern se­aboard,” said Si­mon Dun­don, Gen­eral Man­ager Sales and Dis­tri­bu­tion for Ru­ral Bank.

“How­ever, with im­proved sea­sonal con­di­tions and con­tin­ued strong ex­port de­mand, farm­ers can ex­pect more sta­bil­ity across agri­cul­tural mar­kets.”

The re­port iden­ti­fies sev­eral pos­si­ble agribusi­ness trends for this year. These in­clude: 1. Cat­tle prices strengthen due to re­duced

sup­ply and strong ex­port de­mand 2. Far­m­gate milk prices con­tinue an up­wards

tra­jec­tory

3. Hor­ti­cul­tural ex­port value to rise

4. Lamb and mut­ton set new an­nual av­er­age

records

5. Chi­nese sports­wear mar­ket drives wool ex­ports

6. The wider econ­omy will see growth • Re­duced sup­ply and con­tin­ued strong ex­port de­mand will sup­port cat­tle prices in 2019 but sea­sonal con­di­tions will be the ma­jor fac­tor de­ter­min­ing price trends.

• Sup­ply is ex­pected to be lower in 2019 with pro­duc­ers across the coun­try look­ing to hold on to cur­rent herd size un­til sea­sonal con­di­tions im­prove. • China will con­tinue to drive ex­port de­mand, with the US, Ja­pan and South Ko­rea re­main­ing big ex­port play­ers.

• Chicago Board of Trade (CBOT) wheat fu­tures rose 30 per cent in Aus­tralian dol­lar terms in 2018 and do­mes­tic val­ues re­sponded with New­cas­tle APW wheat firm­ing 60 per cent year-on-year. These strong pre­mi­ums have been built into do­mes­tic mar­kets, re­flect­ing the east coast feed grains short­age, and sup­port­ing lo­cal val­ues at lev­els above ex­port par­ity.

• A re­turn to av­er­age con­di­tions could see an Aus­tralian wheat crop in ex­cess of 24 mil­lion tonnes in 2019, a 50 per cent in­crease on the 2018 sea­son.

• As Aus­tralia’s largest bar­ley mar­ket, China’s mar­ket ac­cess will be an im­por­tant fac­tor in bar­ley ex­port val­ues in 2019.

Crop­ping

• It is pre­dicted that far­m­gate milk prices will av­er­age $6.10/kg MS in south­ern dairy states, how­ever with lower sup­ply prices could edge higher.

• Ex­port de­mand for milk pow­der and cheese is ex­pected to re­main sta­ble in 2019 driven by China and Ja­pan.

• Milk sup­ply is ex­pected to be lower in 201819, in­creas­ing com­pe­ti­tion be­tween pro­ces­sors.

• Favourable sea­sonal con­di­tions in Tas­ma­nia and South Aus­tralia through­out 2018 has seen pro­duc­tion be­gin to re­turn to 2015/16 lev­els, with sup­ply tipped to con­tinue to in­crease in the new year.

Wool

• The value of fruit ex­ports is ex­pected to in­crease by 10 per cent in 2019 with China and Hong Kong driv­ing the de­mand for citrus, stone fruit and cher­ries.

• Do­mes­tic de­mand for veg­eta­bles re­mains

sta­ble, with pro­duc­ers look­ing to ex­port mar­kets to boost de­mand in 2019 par­tic­u­larly for car­rots, po­ta­toes and broc­coli. • The value of nut ex­ports is ex­pected to grow by 5 per cent in 2019 due to growth in the price of al­monds and macadamias.

• A star per­former in 2018 was fresh or­anges, with ex­port value and vol­umes in­creas­ing due to de­mand from China, and this will con­tinue to be an im­por­tant mar­ket in 2019.

• Look­ing to set new an­nual av­er­age records, lamb and mut­ton prices are pro­jected to in­crease again in 2019.

• High slaugh­ter rates in 2018 will see de­creased sup­ply in early 2019 with pro­duc­ers look­ing to hold onto re­main­ing stock, how­ever de­mand is show­ing no signs of weak­en­ing. • De­mand from China con­tin­ues to drive high prices for wool, with the Chi­nese do­mes­tic mar­ket now con­sum­ing more than half of its im­ports, par­tic­u­larly the sportwear mar­ket. • There will be no sup­ply shock to the wool mar­ket in 2019 which will aid the con­tin­u­a­tion of high prices.

To view the full 2019 Out­look Re­port, visit: www.ru­ral­bank.com.au/2019out­look

In Aus­tralian agri­cul­ture, 2018 will be re­mem­bered for be­low-av­er­age rain­fall and drought con­di­tions. (Photo AAP)

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