The NAB Rural Commodities Index edged lower in September – down by 1.5% month-on-month in Australian dollar (AUD) terms. In US dollar terms, the index moved a touch higher, up by 0.2% – reflecting the impact of a stronger exchange rate.
Trends among the individual agricultural commodities continue to differ. Both wheat and sugar prices moved higher in AUD terms in September – as wheat markets recovered from three-year lows recorded in August. In contrast, cattle and lamb prices drifted slightly lower, despite a tighter global supply outlook for beef across the next year.
Rainfall conditions were highly mixed in September, with below-to-very much below average levels in south west WA, northern Victoria and inland NSW, but above average in north WA and the NT. The BoM’s forecasts for November through January see above average rainfall for southern and eastern Australia, and generally average conditions for the rest of the country. Temperatures are expected to be warmer than average.
As measured by the El Nino-Southern Oscillation (ENSO) index, climatic conditions in Australia are neutral, with the BoM expecting these conditions to remain in place across summer and into early autumn. The likelihood of a La Niña appears to have reduced in recent months.
From a broader economic perspective, the US Federal Reserve joined a range of other advanced economy (AE) central banks in starting the rate cutting cycle in September, with a 50 basis point cut. The timing and scale of further AE central bank policy rate cuts will depend on progress on inflation and labour market trends. We have brought forward our first expected rate cut by the RBA to February 2025 (previously May).