Rabobank Agribusiness Review - April 2010

Rabobank Agribusiness Review - April 2010

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:

• In New Zealand, March saw conditions remain dry in the north and east of the North Island, leading to ongoing soil moisture deficits. near average rainfall and temperatures across much of Australia, albeit water storage levels in the Murray Darling Basin remain at levels similar to this time last year. The El Niño is showing signs of weakening, with neutral conditions predicted by winter.

• The global economic recovery is continuing, with better US jobs data which is positive for consumption ahead. In New Zealand the recovery remains fragile, with signs of slowing momentum in the housing sector and a weak labour market, lowering expectations for rises in the official cash rate. The outlook for the Australian economy continues to improve, with upward revisions to GDP and inflation forecasts. As a result, the official cash rate rose again by 25 basis points in April.

• The New Zealand and Australian dollars continue to reflect the growth differences between the two countries. Rabobank still expect both currencies to weaken against the US dollar in the second half of the year, although they will remain at elevated levels.

• Global dairy prices surprised on the upside in recent weeks, due to ongoing improvements in the global economy, a weak end to the New Zealand production season and a slow start to the EU season. As a result, optimism is building for the 2010/11 season, particularly in Australia with soft feed grain prices and improved irrigation water availability.

• Young cattle prices have held up in Australia and New Zealand, with Australian prices at their highest level since the global economic downturn began. However, rising US exports into the Japanese market continue to increase competition for Australian beef.

• Global grain stocks continue to place downward pressure on world grain prices, with stocks expected to build again in the coming season. Improved seasonal conditions along the Australian east coast have raised expectations for the domestic crop. Rabobank has raised its wheat production forecast to 21.8 million tonnes, although rains over the next couple of months remain critical to this outlook.

• Oil prices remain elevated due to continued positive sentiment around the global economic recovery, with prices around USD34/barrel above this time a year ago.

To view the full report, please click on the link below:

Australia and New Zealand Agribusiness Review

ENDS

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