Lower cattle and cotton prices, and a slight easing in the price of wheat, have seen the National Australia Bank Rural Commodities Index fall by 1.1 per cent in January, after a 0.5 per cent increase in December.
NAB agribusiness economist Phin Ziebell said the hottest January nationally on record and ongoing lack of rain across most of the country had led to a tough start to 2019 for many commodities.
‘‘Lower cattle prices and very high grain prices saw Queensland, South Australia, Western Australia and NSW all under-perform this month on a state-by-state basis,’’ Mr Ziebell said.
‘‘Victoria and Tasmania were the only states to record an increase, rising by 1.4 per cent and 1.9 per cent respectively, driven largely by dairy’s stronger performance.’’
The dairy index rose 10.2 per cent in January on the back of improved Global Dairy Trade auction prices.
Despite this, high water and feed prices make it unclear how much of this benefit is flowing through to the farm gate.
In terms of livestock, a hot January and disappointing wet season saw the Eastern Young Cattle Indicator fall about nine per cent from December levels.
‘‘Depending on autumn rainfall, there is likely to be elevated restocker demand and upside for the EYCI, which we see sitting around 450¢/kg in the coming months,’’ Mr Ziebell said.
‘‘Both lamb and wool have come back from their 2018 rally, but the long-term trends remain positive.’’
Mr Ziebell said the hot and dry conditions in January were set to continue.
‘‘The national outlook remains hot and mostly dry, which combined with a severe feed shortage and well below average winter harvest in eastern Australia, is causing grain prices to remain very elevated and placing downward pressure on livestock prices.
‘‘Transport costs are also up around the $100/tonne mark, which is adding to persistently elevated grain prices.’’
For other commodities, fruit and vegetables were mixed, with fruit up 11.2 per cent, and vegetables down 1.7 per cent in January, due largely to seasonal conditions.