THE mixed fortunes of Australian farmers were evident this month as global prices and domestic production fluctuated across commodities and regions.The overall Westpac-NFF Commodity Index fell only 1.3 per cent during October, but it masked volatile price movements – from falls of 9.2 per cent to gains of 7.6 per cent.
While grain and wool prices decreased by 9.2 per cent and 8 per cent, respectively, at the bottom of the scale, these were partially offset by substantial price rises for dairy (7.6 per cent), sugar (4.1 per cent), and beef (3.3 per cent).
“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 said the 2008 winter crop harvest looked 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," Mr Burke said.
"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 per cent, cushioned by the depreciating Australian dollar.
The index is now 2.6 per cent below year-ago levels.
Commodities suffering falls include canola (-9.2 per cent), barley (-9.2 per cent), wool (-8.0 per cent), wheat (-5.9 per cent), and cotton (-1.8 per cent).
These falls outweighed major price rises for dairy (7.6 per cent), sugar (4.1 per cent), and beef (3.3 per cent).