Rural Bank, Media Release 14 March 2023
Rural Bank has released its monthly Insights report.
Fast Facts
Cattle
- Rising Australian cattle supply in the next few months is expected to see a continuing decline in Australian cattle prices. Export volumes are likely to increase in the coming months and meet rising demand from South Korea, China and Japan.
- The Eastern Young Cattle Indicator (EYCI) currently sits at 698c/kg, 8.6 per cent lower month-on-month and 37 per cent lower than a year ago. The Western Young Cattle Indicator has also fallen this month to 763c/kg, 12 per cent softer month-on-month.
- Lower prices are largely due to increased supply of cattle coming into the market following multiple years of national herd rebuild.
- On the back of continued recovery from COVID lockdowns, exports to China rose by 18.7 per cent month-on-month and are 8.6 per cent higher year-on-year.
Cropping
- Australian winter crop production is now estimated at a new record of 67.3 million tonnes in 2022/23 surpassing the previous year’s record by an additional four million tonnes and driving record pace for crop exports in recent months.
- Local wheat prices on the east coast have been steady to higher on solid demand from the feedlot sector, while record production is acting as a handbrake on positive movements.
- This represents an upward revision of around 8.4 per cent from the December 2022 Rural Bank Insights report. Wheat and canola production also hit new records, while barley production ranks third.
- Local prices on the east coast have been steady to higher on solid demand from the feedlot sector.
- Growers appear to be marketing lower grades of wheat into the feedlot system. At the same time growers remain reluctant to sell higher protein grades while they see potential for higher bids.
- Wheat remains an unpredictable and ultimately volatile market. After the past month’s losses, the wheat market looks oversold. How much it can recover will depend on Northern Hemisphere Spring weather and geopolitics.
Dairy
- The Global Dairy Trade index declined this month, driven by declining milk powder, cheddar, and butter prices. Australian milk production showed some positive signs in January but remains very tight. Early announcements for 2023/24 opening farmgate milk prices will be eagerly anticipated in the coming months.
- Australian milk production declined in January with a 12 per cent fall from December. However, the gap to production from 12 months earlier closed. Australian 2022/23 average farmgate milk price was unchanged this month.
Horticulture
- Apple and pear harvest is now underway. A slight reduction in 2023 output is forecast following flooding in late 2022. Poor onion production across Europe and India will see strong export demand for Australian onions.
- Europe is currently in the middle of an onion shortage following heatwaves during their summer months. This has driven strong demand for Australian onions from European buyers.
- Surplus Australian onion volumes will likely be exported to European markets as a result.
- South Australia and Tasmania will see the largest demand following strong production in these states.
- Hot temperatures across India are also negatively impacting onion production on the sub-continent. India have also recently reduced its import tariff on Australian onions. These two factors will likely drive increased demand from India for Australian onions.
- Record Macadamia production in 2023 will keep prices below average and almond growers are anxious to understand the impact the reduction in availability of beehives during the key August pollination period has had on yields. Reports of weather damage through parts of Victoria and southern New South Wales are also expected to weigh on almond output.
Sheep
- Lamb and mutton prices are set to remain subdued through autumn as high supplies continue to be met by reduced competition among buyers.
- A dry start to 2023 and a dry outlook will also play into producer intentions in autumn and likely lead to sustained high supply.
- A slowdown in export demand has also contributed to weaker lamb prices. There has been a noticeable decline in export volumes since October.
- Average monthly export volumes between November 2022 and February 2023 were 15 per cent lower than the preceding six months from May to October. Encouragingly, export volumes to China were 21 per cent higher year-on-year across January and February.
- This is a good improvement from the 17 per cent decline seen across 2022.
Wool
- The last four sale weeks of February averaged national offerings of greater than 50,000 bales indicating both an interest in the year’s opening prices and an increase in supply.
- The recovery of prices since late 2022 has slowed down after a strong start to the year.
