Australian Rural Commodities Wrap
24 July 2015
- The NAB Rural Commodities Index was steady in June – up 0.2% in AUD terms but down 0.9% in USD terms. The neutral result in AUD terms largely reflects higher grain and protein prices offset by sharply lower fruit, vegetable and to a lesser degree sugar prices.
- The AUD has resumed its downward trajectory, providing support to local prices. We have revised down our AUD/USD forecast to a low of 71 US cents in early 2016 (previously 73 US cents). This downward revision has led us adjust to our 2015-16 price forecasts, specifically with upward revisions to forecast wheat, sugar and cotton prices.
- Weather remains a concern, with rainfall very patchy overall in June and parts of the country still very dry. The Bureau of Meteorology’s latest three month ahead rainfall outlook forecasts drier than average conditions in northern and eastern Australia through late winter and early spring are consistent with a ‘classical’ El Niño event. Last month we highlighted the risk of El Niño to Australia’s wheat crop. The Bureau’s rainfall outlook keeps this risk very much live.
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