Australia and New Zealand Agribusiness Review: Oct

Please find attached Rabobank’s October 2009 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:

• Temperatures have been on the rise in New Zealand, with warm and relatively dry conditions across most of the South Island, and wet conditions in parts of the North Island. All regions have recorded moisture levels at field capacity. Rainfall across most of Australia was close to average in September, although parts of New South Wales and Queensland received lower than average falls. Temperatures have risen markedly across most regions, and are expected to remain above average levels for the remainder of the year.

• The momentum towards global economic growth slowed in September, although taken as a whole global economic data still supports a return to consistent growth trends by the end of the year.

• In New Zealand, the latest economic data also shows an improvement in conditions, with a surge in business confidence following growth in the June quarter, the first quarter of growth since the end of 2007. The Australian economy has strengthened and the Reserve Bank of Australia increased the official cash rate by 25 basis points in October. This reflects economic data that continues to surprise on the upside, including retail sale, although the trade deficit was larger-than-expected in August. Both the New Zealand and Australian dollars are at 12 month highs.

• Young cattle prices have experienced a slow decline during the past few months in both New Zealand and Australia and are now below prices recorded one year ago. Slow export demand and higher exchange rates have held prices down.

• International demand for dairy continued to strengthen through September, driven by improved consumption and possibly a rebuilding of inventories at a time when milk supply is in decline. The timing and rate of release of large government stockpiles in the Northern Hemisphere will impact pricing in coming months, with current reports suggesting the sell down may not commence till 2010.

• World grain prices continued to slide in September. Wheat prices have suffered most, although they remain above the 10 year average. Ample global supplies and slow demand for exports imply prices will remain subdued. Low prices have many Australian growers holding off on making sales commitments, despite what is shaping up as a good crop in many districts, particularly in the west and south of the continent.

• The Baltic Dry Index has eased back from year-to-date peaks. Oil has also eased a little from its peak in August, and is now trading around USD70/barrel.

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

Australia and New Zealand Agribusiness Review

ENDS

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