National Australia Bank (NAB), Media Release, 27 May 2024

An increase in wheat prices helped lift the NAB Rural Commodities Index* by 3.2 per cent month-on-month in April, after the Index slipped 5.7 per cent month-on-month in March.

NAB’s May Rural Commodities Wrap released today reports the Index is now around levels seen in April 2023.  

This is largely driven by wheat prices which increased around 4 per cent month-on-month in monthly average terms after declining for five consecutive months.

NAB Group Economics Associate Director Lea Jurkovic said downgraded expectations of global wheat supply, particularly from Russia, helped support global prices.

“Canola and feed barley also saw price increases of around 4 per cent, while the price of malting barley remained flat,” Ms Jurkovic said.

“Prices for fruit, vegetables, lamb, and dairy also recorded increases in the month. Cattle prices were relatively unchanged in the month, rising around 0.7 per cent in monthly average terms.

“Trade lamb prices rose about 6.5 per cent month-on-month in April in monthly average terms, largely retracing their fall in March.

“Wool prices were little-changed in the month, slipping 0.5 per cent month-on-month in April in monthly average terms. Confidence among producers improved towards the end of April with strengthening demand from several large Chinese mills.”

The Bureau of Meteorology reported national rainfall in April was 26 per cent below the long-term (1961-1990) average.

The El Niño event ended in April, leading to mixed seasonal conditions across the country, with the north and east experiencing above-average rainfall, while other regions had below-average rainfall. From June to August, rainfall is expected to be above average for much of inland Australia.

“Fertiliser prices fell around 15 per cent month-on-month in April in monthly average terms. Falls in the prices of urea, due to the falling price of ammonia, and diammonium phosphate (DAP) drove the fall; the price of natural gas increased slightly,” Ms Jurkovic said.

“In the Australian economy, inflation continued to moderate in Q1 to 4.0 per cent year-on-year on the trimmed mean measure but came in slightly stronger than expected.

“The Federal Budget, announced in May, includes key measures such as the Future Made in Australia program (which includes solar panel manufacturing), the extension of the small business instant asset write-off, and cost of living relief through a $300 energy bill subsidy for each household.”

The RBA left the cash rate unchanged at 4.35 per cent in May, as expected. Updated RBA staff forecasts show a downside revision to economic growth for 2024, and an upward revision to inflation this year due to the upside surprise in Q1.