Australian Agriculture Outlook 2019 tips a positive year ahead
AUSTRALIAN agriculture is set for a bumper year with forecasts predicting cattle prices to strengthen, farmgate milk prices to push upwards and lamb and mutton to set new annual average records.
That’s according to Rural Bank’s Australian Agriculture Outlook 2019 released today.
Following a year of below average rainfall, high feed costs and the smallest grain crop on the east coast in nearly a decade, Rural Bank says the year ahead will be one where “production and prices depend heavily on rainfall”, particularly the cattle market.
“Seasonal conditions will be the most significant factor to affect how cattle prices will perform in 2019,” Rural Bank’s general manager sales and distribution Simon Dundon said.
“Dry conditions could see prices continue to ease to below 500c/kg whereas significant rainfall would see a return to herd-rebuilding activity, with the potential to reach 600c/kg.”
Lamb and mutton prices are forecast to continue their exceptional run into the new year due to tight supply and a strong export demand, with lamb prices to average higher for the seventh consecutive year.
The Eastern State Trade Lamb Indicator is expected to sit above 700c/kg for much of the year, while mutton prices are predicted to regularly exceed 500c/kg, according to the report.
“Australian sheep meat will continue to be sought after in the international market as consumption across the US, China and Middle East rises, with prices forecast to set new annual average records.”
China will also help drive high prices for Australian wool, particularly the sportswear market.
Rural Bank estimated
6–10% less wool would be produced in 2018-19 compared with the previous year.
“Demand for Australian wool is strong, particularly in the global market as New Zealand’s sheep flock continues a decade-long decline. The market fundamentals that pushed wool prices up over the past three years are expected to remain at a similar level in
2019,” Mr Dundon said. Milk supply is down four per cent due to dry seasonal conditions and high input prices, with Rural Bank forecasting production to finish at nine billion litres.
Demand for dairy exports is expected to remain stable, according to the report, however “volume and value could be lower due to falling milk production in Australia”.
Farmgate milk prices are expected to average $6.10/kg MS in southern dairy states, however prices could edge higher with lower milk supply.
“Prices could even go beyond the average of
$6.24/kg MS, last seen before the milk price drop in
2016,” Mr Dundon said. The value of horticultural exports will continue to grow in 2019, with fruit to increase by 10%, nuts by 5% and table grapes by 3%.
This is being driven by demand for citrus, stone fruit and cherries from China and Hong Kong.
The growing market for almond milk is also expected to boost demand for almonds, while table grape production is expected to increase by 18% with strong demand from China and Japan.
Domestic feed markets will be the key driver of grain values in 2019, according to Rural Bank.
The report says a return to “average conditions” could see an Australian wheat crop of 24 million tonnes – a 50% increase on 2018, but 5% below the five-year average.