By Phin Zeibell NAB
Australia, Victoria and indeed the Goulburn Valley are now in the midst of one of the best agricultural seasons in living memory. 2020 delivered an excellent result and all signs point to 2021 being even better. Seasonal conditions are excellent and commodity prices continue to perform.
The seasonal outlook to the end of the year points to wetter than average conditions and the Bureau of Meteorology is now on La Nina watch, backing in the prospect of a wetter than average spring in the east of the country. This suggests that a record grain harvest is clearly in frame.
Meanwhile, commodity prices continue to strengthen. The Eastern Young Cattle Indicator (EYCI) broke through the $10 barrier around earlier this year – an extraordinary (and probably unsustainable) result. The wet spring outlook could even see upside for cattle prices, but we continue to see this market as substantially overheated.
Grain prices continue to look good, reflecting an ongoing rally in global markets. Canola prices are looking particularly impressive. We now see Australian wheat prices around the $350/t mark in the December quarter, having previously expected prices in the low $300s range.
Dairy – a traditional strength in the Goulburn Valley – is enjoying its best conditions in years, with strong opening prices and lower input costs, particularly water. There some challenges however, particularly in labour availability for horticulture. This labour shortage is unlikely to be resolved this year.
