Market

Report Highlights

Climate

April rainfall was below average for most of Victoria, New South Wales, Tasmania, central Australia and southwestern Western Australia. The national outlook for May-July 2013 indicates a wetter than normal season is more likely for the southern half of Queensland, northern NSW, far northeast WA and much of the NT; but a drier than normal season is likely for Tasmania, most of Victoria and southeastern SA.

Economy/Currency

Growth in global trade slowed considerably in 2012 as the crisis in the euro zone reached fever pitch and growth in the European Union, the world's second largest import market, languished.

Looking ahead, the World Trade Organisation expects only modest improvement in global trade activity in 2013, driven largely by stronger conditions in emerging market economies.

Exports from Australia and New Zealand continue to be affected by subdued global demand. That said, the increasing focus on markets in Asia is a considerable advantage, and there are signs that stronger economic growth in this region is beginning to feed through into growth in merchandise exports in 2013.

Beef

Very dry conditions have continued to pressure markets with cattle prices continuing to trend downwards in recent weeks. The Eastern Young Cattle Indicator (EYCI) is now sitting at AUD300.75c/kg, a drop of AUD 73.25c/kg since the same time last year.

Increased slaughter rates continue to lead to very strong increases in export volumes to destinations including China and the Middle East. With Australian beef exports to China reaching 11,654 tonnes for the month - taking total exports to China to 40,277 tonnes so far in 2013. China remains Australia's third largest export destination after Japan and the US.

Sheepmeat

Dry conditions throughout April continued to pressure lamb prices lower, as producers continued to turn off stock. The increased supply in April resulted in a 55c/kg or 13% decrease in the ESTLI month-on-month to AUD378c/kg. Present prices are reflective of the climatic conditions currently being endured by Australian producers.

Overall, Australian lamb exports improved 1.2% to 15,483 tonnes throughout April. Exports to the US improved 14% on the same time last year to 3,024 tonnes. In contrast, Australian exports to China decreased 13% across the month, however remain 12% higher on this time last year.

Dairy

Global commodity prices continued to surge through April, but by month-end evidence was appearing that the top has been reached.

Oceania powder prices topped out at around USD5,500/tonne with some reported prices easing towards USD5,000/tonne by month end, particularly for skim milk powder (SMP).

Prices are still much higher in Oceania than evident in both the EU and the US, with price convergence between these regional markets expected to occur as the new Southern Hemisphere season gets underway in several months time.

In Australia, milk flows slumped in March due to ongoing weather-related issues. National output in March was down 7.1% year-on-year. Season-to-date production is now trailing the previous season by 1.6%.

Most dairy farmers are still awaiting for a much need autumn break. The latest weather outlook suggests a drier than normal season is expected for most of Australia's key dairying regions.

Wool

The Eastern Market Indicator (EMI) experienced its largest monthly decline for 2013 during April, decreasing AUD 89c/kg or 8.40% to 970c/kg. This was the first time the indicator fell below AUD 1,000c/kg in 2013.

The 21 micron wool index declined the greatest of all classes, falling almost 10% during April, due to the over supply of course merino wool. China, the largest importer of Australian wool has slowed its buying of this luxury fibre, as the Chinese economy continues to under perform.

The elevated Australian dollar continues to pressure wool prices.

           
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