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Winners & losers in a mixed bag this winter harvest

17 November 2008

THE mixed fortunes of Australian farmers were evident this month as global prices and domestic production fluctuated across commodities and regions. Despite the overall Westpac-NFF Commodity Index falling only 1.3% over October, this masks volatile price movements – from falls of 9.2% to gains of 7.6%.

While grain and wool prices decreased by 9.2% and 8%, respectively, at the bottom of the scale, these were partially offset by substantial price rises for dairy (7.6%), sugar (4.1%), and beef (3.3%).

“The weakening Australian dollar prevented what could have otherwise been an extreme month for global agricultural commodity prices,” Westpac Senior Agribusiness Economist Andrew Hanlan said.

“Pricing fundamentals do not always prevail when erratic market conditions, such as those currently being experienced on world financial markets, start to dominate investor decisions. This can definitely be said of this month’s agricultural commodity price movements and reinforces the variability that can be an aspect of all commodity markets when investor confidence receives a shock.”

NFF Vice President, Charles Burke added: “To ram home the fluctuating fortunes that beset Australian farmer’s prospects, the 2008 winter crop harvest is looking to be a real mixed bag... even within sectors.

“As the winter grain harvest kicks off across the grain belt, farmers in much of northern NSW, Queensland and WA are looking at solid yields. However, a lack of spring rainfall across southern NSW, Victoria and SA has seen a noticeable deterioration in the winter crop forecast in those regions, with ABARE downgrading their winter wheat production forecast to less than 20 million tonnes.

“With these uncertain weather patterns continuing to beset agricultural production in Australia there will be winners and losers this winter.”

During October, the Westpac-NFF Commodity Index decreased by 1.3%, cushioned by the depreciating Australian dollar. The index is now 2.6% below year-ago levels. Commodities suffering falls include canola (-9.2%), barley (-9.2%), wool (-8.0%), wheat (-5.9%), and cotton (-1.8%). These falls outweighed major price rises for dairy (7.6%), sugar (4.1%), and beef (3.3%).

[ENDS]

The Westpac-NFF Commodity Index is weighted according to the value of Australian agricultural exports and includes only rural commodities – unlike other price indices that are overshadowed by oil, mineral and energy prices. It provides daily movements based on prices of Australia’s eight key farm exports – barley, beef, canola, cotton, dairy, sugar, wheat and wool – in both $US and $A.

Media Enquiries: Brett Heffernan on (02) 6273 3855 or 0408 448 250.

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