Meat & Livestock News

October’s Agribusiness Report by Rabobank Forecasts Market Volatility Amid Weather and Global Trends

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Rabobank’s latest October agribusiness report starts with an analysis of weather data from the National Institute of Water and Atmospheric Research (NIWA) for September.

The report shows a modest 0.4% uptick in milk production across the seven key milk-exporting regions. This subdued growth is accompanied by a potential ‘whiplash’ in milk prices. A rebound in demand could outstrip supply, leading to a more bullish market outlook extending into 2024.

In the realm of beef, North Island prices are projected to slightly surpass the five-year average by month-end. This comes after prices rebounded in August following a July slump.

The American market is looking favourable for New Zealand beef, marked by elevated domestic lean beef prices and dwindling inventory levels. Despite a 40% year-on-year drop in shipments to China, this gap is largely filled by a substantial rise in export volumes (+118%) and values (+80%) to the United States.

Lamb prices are holding steady, albeit at historically low levels, continuing the pattern set in August. China remains the dominant market, absorbing 50% of all lamb exports. However, the value of these exports has declined by a quarter compared to last year.

Encouragingly, demand from alternative markets like the UK and the US has shown resilience, both in volume and value terms. Early indicators also point to a revival in the Chinese market.

The report revisits Rabobank’s earlier forecast that the spike in fertiliser prices would be short-lived. This has been substantiated by a 2.5% decrease in the Middle East benchmark price for urea and a levelling off of Canadian potash prices.

Moreover, prices for herbicides, fungicides, and insecticides in China have plummeted by 30% year-on-year, indicating a more cost-effective landscape for agrichemicals and fertilisers in the coming season.

In closing, Rabobank underscores economic indicators. With Q2 economic growth surpassing projections and a revised Q1 outcome shifting into the black, the odds of an imminent hike in the official cash rate have increased, particularly in light of a weak currency and escalating global energy costs.