Barley was one of the star performers on the NAB Rural Commodities Index for August, with feed barley prices rising $46 a tonne to $340/t primarily on the back of renewed access to the Chinese market.
The bullish barley market was not enough to stop a 1.6 per cent fall in the Rural Commodities Index, which is now down 30.7pc on its June 2022 peak.
While there was good news for barley other key agricultural commodities did not fare so well, with lamb's well-documented woes seeing it drop by a whopping 11.2pc month on month while vegetables were down 6.4pc and cattle down 5.4pc.
In barley's corner as a positive, sugar producers are enjoying prices that have moved back above $900/tonne, underpinned by strong global market conditions, with demand continuing to grow while exports from key sugar producing nations such as Thailand and India will be impacted by drought, with the latter banning exports to secure domestic supplies.
NAB senior economist, Gerard Burg, said Australia's rapidly drying spring was also weighing heavily on confidence.
He said while the Bureau of Meteorology (BOM) has not yet declared an El Nino event, its El Nino alert remains, and it anticipates it will develop in spring.
"This is likely to result in hotter and drier conditions across eastern and northern Australia, negatively impacting a range of key agricultural regions," Mr Burg said.
"Dry conditions due to the emerging El Nino have impacted cattle and trade lamb prices and are expected to substantially impact crop yields.
"Despite a marginal upward revision, the Australian Bureau of Agricultural and Resource Economics and Sciences' (ABARES) September forecasts still expect winter crop production to fall by almost 34pc in 2023-24, down from record highs in 2022-23," he said.
This anticipated drop in production has insulated key grain commodities such as wheat and canola from the falls being seen elsewhere globally.
"Australian wheat prices continued to broadly track sideways in August, having settled at around $400/t since late 2022."
"Canola prices edged up above $700/t in mid-August, before dropping back below this level in early September."
Currency has provided some solace for agricultural exporters.
Mr Burg said the softening trend for the Australian Dollar that started in mid-July continued across August and into early September, dropping below US64 cents, reflecting a stronger US dollar and weaker sentiment around China.
NAB now forecasts the AUD will end 2023 at US66c but trending higher across 2024.
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
