Rabobank September Agribusiness Review 11/09/08
Rabobank September Agribusiness Review
Please find attached a link to Rabobank's September 2008 Australia and New Zealand Agribusiness Review.
Prepared by the bank's Food & Agribusiness Research and Advisory division, the report provides monthly commentary on New Zealand and Australian economic and agricultural conditions. Highlighted in this report:
• New Zealand experienced a very wet August with many regions receiving 1.5 times the monthly average rainfall. In contrast, rainfall across most of Australia was below average in August with many cropping regions in desperate need of early spring rains to maintain crop prospects.
• Interest rates appear to have peaked in the current cycle. RBNZ and RBA have now both cut rates in the past two months, with the New Zealand OCR now at 8% and Australia's benchmark cash rate falling by 25 points to 7%. The change in interest rate sentiment and renewed interest in the USD saw both the New Zealand and Australian currencies sold off hard against the USD in August in very encouraging signs for both countries' export-focussed agriculture sectors.
• A broad sell off in global commodities markets got underway in August with oil leading soft commodities lower in the month. Wheat, corn, soybeans and sugar have all declined substantially in global markets since their June peak driven by USD strength, growing concerns over the impact on demand from the slowing global economy and substantial liquidation of long positions by investment funds.
• Global dairy prices have lost altitude through August with demand slowing in response to record high prices and expectations on exportable supply improving. The full impact has been buffered by declining local currencies.
• Global beef markets remain strong despite the return of the US product to north Asian markets, driven by lower supply availability from key exporters such as Australia, New Zealand and Brazil. New Zealand benchmark cattle prices are 25% higher than the same time last year in a welcome turnaround for the sector.
• Sheep meat prices maintained higher levels in both Australia and New Zealand through August. Benchmark indicator prices are at or near their highest point in 18 months in both countries, with the impact of drought in Australia, and poor recent season prices in New Zealand having a particularly negative impact on the supply outlook for the 2008/09 season.
To view the full report, please click on the the link below: