Following a large monthly gain of 6.5 per cent in September, the NAB Rural Commodities Index has continued to perform well month-on-month, rising a further 1.8 per cent in October.
Released on November 12, the latest index shows sugar and barley were key drivers of the increase, which was offset by weakening lamb and wool prices.
NAB agribusiness economist Phin Ziebell said sugar had enjoyed a 24.1 per cent price rise in October, while prolonged drought conditions, and associated domestic feed demand, had led to a 11.7 per cent rise in barley prices.
‘‘Domestic feed prices are still extremely elevated compared to historic norms and global benchmarks,’’ he said.
‘‘This is reflective of poor grain availability amid drought conditions, and below-average 2018-19 winter crops.
‘‘Some recent rain caused grain price indicators to soften slightly, but things are far from normal.’’
While lamb prices fell nine per cent over the period, in what was the biggest monthly fall across all commodities in the index, wool was also five per cent softer than last September.
‘‘Lamb prices have been on a rollercoaster recently,’’ he said.
The National Trade Lamb Index peaked at 875¢/kg in early September, before falling to 671¢/kg in early October, rising to 783¢/kg in late October and now sitting back at 678¢/kg.
‘‘Despite this, lamb prices remain very good for producers on the whole,’’ Mr Ziebell said.
‘‘The demand for wool has softened, and this saw the Eastern Market Indicator drop back to 1776¢/kg last week. We anticipate that this downward trend will continue if buyers keep holding out.’’
Despite dry conditions in much of the country, the Eastern Young Cattle Indicator remained resilient, according to Mr Ziebell.
‘‘The ongoing resilience of the EYCI is largely a result of strong demand for finished cattle, as opposed to any restocker demand, which is likely to be constrained by a dry weather outlook and high feed costs,’’ he said.
‘‘Whether or not this demand is sustainable remains to be seen, and we will be watching US domestic market developments closely.
‘‘Over the coming months, we anticipate that the EYCI will sit in the mid-400¢/kg to low 500¢/kg level.’’
On a state-by-state basis, Queensland was the best performer in October rising 3.3 per cent, followed closely by Western Australia at 2.9 per cent, while lower lamb and dairy prices impacted on Victoria, South Australia, Tasmania and western NSW.