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New Zealand And Australia Agribusiness Review

Contributor:
Fuseworks Media
Fuseworks Media
New Zealand And Australia Agribusiness Review

Prepared by the bank's Food & Agribusiness Research and Advisory division, the report provides monthly commentary on New Zealand and Australia economic and agricultural conditions. Highlighted in this report:

La Nia conditions have continued to develop across the Pacific and as a result August was wet across most of Australia, except the southwest of Western Australia. The three-month outlook for Australia remains generally neutral. New Zealand also had a relatively wet month, with the three-month outlook for generally normal conditions.

The global economy has continued on an unsteady trajectory with a broad-based recovery remaining elusive. Data from the US has been most concerning, while data from the eurozone has tended to surprise to the upside, and growth remains on a solid footing across Asia. The Reserve Bank of New Zealand kept rates at 3%, with strong retail figures offset by weak data elsewhere. The Reserve Bank of Australia has kept rates on hold at 4.5%, despite better-than-expected Q2 GDP growth, which showed the private sector starting to lift. Rabobank believes the New Zealand dollar will settle in the USD0.68-0.73 range. The Australian dollar is trading around USD0.90, although Rabobank believes it will drop into the USD0.85-0.90 range.

Global dairy prices have rallied in recent trade auctions, as demand has improved despite ongoing milk supply growth in the Northern Hemisphere. There has been a strong start to Southern Hemisphere production, with good conditions in both New Zealand and Australia.

In general, beef prices continued to shift upwards through August. Beef prices have also improved in New Zealand, driven by offshore demand and tight supply. Prices for heavier cattle in Australia have remained flat while young cattle prices have improved. Lamb and sheepmeat prices remain at strong levels in New Zealand and Australia, with tight supply and strong demand expected to keep prices at elevated levels

Global grains prices are being driven by supply-side factors. Concerns over supply have held global wheat prices around USD7.00/bushel for most of the last month. The current factors markets are focussing on are European and Russian production outcomes and Australian and Argentine production, with any (further) setbacks expected to cause prices to lift. Prospects for the Australian wheat crop remain positive, with good conditions prevailing on the east coast while dry conditions are challenging production in Western Australia.

Oil prices have been trading in a range between USD70-80 for most of the past three months.

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