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Dinner in Restaurant
Writer's pictureIan Watson

Rural Q2 2022 Market Insights

GRAIN

  • Focus turns to weather and the Northern Hemisphere harvest

  • Stocks are still historically tight

  • AUS winter crop forecast is above average.

The Ukraine war enters its fifth month and shows no signs of stopping. The supply constraint-driven rally pushed commodity prices to record highs in mid-May with the Dec ’22 CBOT contract reaching 1250¢/bu and locally new season cash prices approached $500/t. Much of the talk was centred on the cost of food, inflation, developing energy and humanitarian crisis and moreover, the need for a solution.


CATTLE

  • Increasing supply and sluggish winter demand

  • US 90CL prices fall on weakening US demand and high domestic slaughter

  • Biosecurity threatens export demand.

As we eased out of summer, for a while, it looked like the cattle market would remain in a blissful state, where not only the leaves of Autumn were golden, but there would be a resurgence of good times and sustained steep climbs in price again.


LAMB & SHEEP

  • Old season lamb supply & quality issues dragging prices

  • A tight global supply balance favours a long-term outlook

  • Switch from Merino’s to meat breeds.

A cold and wet winter comes with challenges. Gaining or even just maintaining weight becomes difficult. Worms, infections, and diseases emerge, focusing on animal health management. All in all, productivity, reproductive performance, and condition of sheep and lambs are generally lacking. While broadly, the seasonal conditions in the south have been very favourable, large parts of NSW have been dealing with these challenges, which has contributed to the softer lamb market.

WOOL

  • Fine Merino prices had a great quarter, aided by a weaker AUD

  • Crossbred wool continued to sell at high volumes for a low price

  • Faulty wool continued to cause problems.

The Australian dollar started the quarter at US76 cents and finished at US69 cents. While the 16.5 to 17.5 MPG returned in June to their June 2021 peaks, in US dollar terms, they trended higher to reach late 2018 levels. Generally, wool prices in Australian and US dollar terms follow similar trends and cycles at different price levels.

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