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By Georgia Devenish - Agricultural Research Analyst at JLL.
Australian lamb, mutton and beef exports have been experiencing significant growth. Recent data from the Department of Agriculture shows lamb exports reached the second highest monthly volume on record in April. Beef exports for the year to April 2019 have increased 12 percent year-on-year. The volume of mutton exported was 20 percent higher year-on-year. Industry commentators agree higher slaughter rates are a significant factor. Exporters have benefited from increased global demand for animal protein absorbing the elevated volume of supply.Ad - Give Morgans a call for all your bulk Haulage, Grain Marketing and 24 hour Fuel access in Central Victoria - Ad
The USDA's latest 'World Agricultural Supply and Demand Estimates' report forecasts an increase in Australian wheat production in 2019/20 to 22.5 million tonnes and an increase in wheat supplies globally. Senior analysts suggest that the increased supply will put downward pressure on prices as growth in demand falls behind growth in supply.
Demand from eastern Australian livestock feeders has underpinned a recent lift in barley prices. The relative attractiveness of barley compared to wheat has led eastern feedlot owners to reformulate least-cost rations and subsequently switch out of wheat and into barley.
Harvest of this season's broadly below average sorghum harvest is wrapping up. Low soil moisture, low in-crop rain in many parts and hot temperatures over January all contributed to the low yields. One upside for growers has been that the sorghum price has held at reasonable levels.
Trade diversion and changing crop patterns as a result of the continued trade tensions between the US and China will effect Australian producers. Increased volatility and disruption to short-term demand and trade flows is being observed in the cotton and soybean markets. Traders are becoming increasingly anxious about US cotton demand given China is the largest single importer of US cotton. At present, the 25 percent US cotton duty in China remains unchanged.Ad - Give Morgans a call for all your bulk Haulage, Grain Marketing and 24 hour Fuel access in Central Victoria - Ad
Demand for Australian wheat takes a hit as major customers look to the Black Sea for cheaper imports. End users in Indonesia have said the lower price more than makes up for any difference in quality. USDA analysis suggests just over 6 million tonnes of wheat will be exported from Australia for the season, well below the ten year average and the lowest level seen in 47 years.
The Department of Agriculture has approved a permit to import bulk wheat from Canada, the first approval of its kind made since 2007. The high protein wheat will be used for processing by Manildra Group who cited drought and subsequent short supply of high protein wheat as its cause for action. Last week, the Department told the ABC it was assessing 11 applications to import bulk grain into Australia. The applications applied to canola, wheat, corn and sorghum.
According to Rabobank, global wine prices are under pressure as world production rebounds, the market in China tightens, and slowing growth is observed in the US market. On the upside, Australian wine prices have been tracking above other major exporters with the industry well positioned to cater to the a growing demand in China and other markets for Australian wine.
Trade data shows the volume of global dairy exports increased by approximately 21 percent between 2012 to 2018, while Australian dairy exports recorded growth of 3 percent over the same period. New Zealand is the world's largest exporter with a 40 percent share of the global market and accounts for 50 percent of the Chinese import market for cheese. Australia accounts for 6 percent of the global market.Ad - Give Morgans a call for all your bulk Haulage, Grain Marketing and 24 hour Fuel access in Central Victoria - Ad
Ruralco has reported a six-month profit of $16.6 million despite a downturn in cropping activity, cattle prices and its water services business. Higher stock feed demand and saleyard numbers helped the company weather the adverse operating conditions. Managing director, Travis Dillon, highlighted the geographical spread of business and the mix of operations as having underpinned their performance over the period.
Fund manager Stafford Capital has launched a new $150 million fund that will acquire and lease out productive farms. James Allen, investment manager at Stafford Agriculture & Food, said they were looking to target "medium-size assets in the $2 million to $8 million range, so a much more liquid fund than the market’s seen before... our aim is to build a portfolio of 30 to 40 assets in Western and Eastern Australia, raising about $150 million in equity up to a maximum of $200 million, targeting an 8-9 percent internal rate of return."
Sundrop Farms has been sold to trans-Tasman infrastructure investment firm, Morrison and Co. for an undisclosed amount. Sundrop Farms opened the only facility of its kind in the world at Port Augusta in South Australia in 2016, and uses sunlight and seawater to grow tomatoes. The commercial facility reportedly cost approximately $200 million to build, with private equity firm Kohlberg, Kravis and Roberts investing $100 million. The facility produces about 17,000 tonnes of truss tomatoes per year and holds a 10-year supply contract with Coles Australia.
A group of nine Murray irrigators has lodged a class action in the Supreme Court of New South Wales against the Murray-Darling Basin Authority, claiming its negligent water management has caused them severe financial losses totalling $750 million.Ad - Give Morgans a call for all your bulk Haulage, Grain Marketing and 24 hour Fuel access in Central Victoria - Ad
The latest climate outlook has been released by the Bureau of Meteorology for the June to August period. The report forecasts large parts of Australia are likely to be drier than average over winter with warmer than average days.