Rabobank Agribusiness Review June 2011

Please find attached Rabobank’s latest Agribusiness Review for New Zealand and Australia.

Prepared by the bank’s Food & Agribusiness Research and Advisory division (FAR), the report provides monthly commentary on New Zealand and Australian agricultural conditions.

Key highlights:

This May was the warmest on record in New Zealand, with some regions experiencing wet and others dry conditions. The seasonal outlook is generally for warm conditions with average soil moisture levels. Australia had a cool, dry month in May, and the seasonal outlook for wet conditions in Queensland and dry conditions in the southwest of Western Australia remains. Other regions are expected to experience average conditions, with a chance of warmer-than-average conditions across the south of the continent.

• A looming fiscal crisis in Europe, possible slowing of activity in the US and wavering Asian growth provide an air of uncertainty around the global economic outlook. The rural sector provides a bright note to New Zealand’s outlook, and business confidence appears to be improving slowly, although the outlook is still flat. Mixed messages prevail in Australia, with a sharp drop in Q1 GDP matched by firm investment and sales data.

• The AUD remains strong against the USD and has been trading around USD1.07 in recent days. The NZD also remains strong and is trading above USD0.80.

• Global dairy markets appear to have stabilised over the past few months, with most prices set well above last year levels but below the 2007/08 peaks. Production has continued at strong levels in New Zealand and Australia, with strong import demand still absorbing production. The price outlooks for the coming season in New Zealand and Australia are both favourable.

• Beef prices in New Zealand and Australia have continued to ease from recent highs, with the strength of local currencies becoming a headwind for exporters. Levels do though remain well above last year levels. Lamb prices in New Zealand have continued to strengthen, but have continued to ease in Australia, with heavy lambs destined for export markets experiencing the greatest pressure.

• Global grains markets remain weather-dominated and tight stock positions mean price volatility is set to continue. The lifting of the Russian grain export ban did little to influence market sentiment. Conditions in Australian winter cropping regions have improved in Western Australia, with much-needed rain falling in recent weeks, and remain favourable across south-eastern Australia.

• Oil prices have eased back towards the USD110/barrel mark over the past month.

To view the full report, please follow this link:
New Zealand and Australia Agribusiness Review

ENDS

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