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Agriculture outlook

Australian agriculture outlook 2024

Rural Bank’s Outlook for 2024 provides an in-depth perspective on supply, demand, and price. Six major agricultural commodities are covered, along with carbon and climate. The Outlook aims to help Australian farmers make informed decisions.

There are three key themes that will impact Australian agriculture in the first half of 2024. These include seasonal conditions, trade conditions and economic headwinds.

Cattle

Rising beef production and opportunities for export growth provide an improved outlook for Australian producers in the first half of 2024.

Cropping

El Niño ended Australia’s run of three consecutive years of record crops. Production forecast to drop 34 per cent from last year. Strong demand for limited supplies to support prices.

Dairy

Milk production will be flat but farmgate milk prices will fall from record highs. Global prices and demand to remain flat early in 2024.

Horticulture

Strong production and growing export demand provide a positive outlook for the first half of 2024.

Sheep

Lamb prices are expected to strengthen into 2024 but remain well below levels seen in prior years. Production is likely to remain relatively high.

Wool

Wool markets to remain stable in 2024 with ongoing soft demand, a small decline in supply and continued shearing cost pressures.

Carbon & climate

There are two upcoming and important developments in the carbon farming sector: a new carbon exchange, and the new Integrated Farm Method.

Executive summary

Australian agriculture operated in a challenging environment in the back half of 2023. Production was affected by drier weather following high output in 2022. Easing commodity prices also impacted Australian farmers in 2023. While improved labour supply and fertiliser costs provided some relief, margins remain tight. Export demand continued to rebound across cropping and horticulture sectors. Though demand for livestock and wool remained subdued, primarily due to economic pressures. On the downside: ongoing economic challenges, a dry summer, and lower commodity prices are weighing on the outlook for the first half of 2024. These conditions make understanding the factors driving the outlook as important as ever.

Coming into the new year with low soil moisture, the production outlook will depend on how autumn and summer rainfall eventuates. The BOM are forecasting the El Niño weather pattern will dissipate by March 2024. The positive Indian Ocean Dipole (IOD) is also expected to ease by late December. The breakdown of both the El Niño and IOD climate drivers should see more average conditions return to eastern Australia. This is particularly beneficial for the cropping sector. As winter crop sowing is underway by April. However, below average soil moisture reserves remain a concern. This will place greater importance on rainfall during the growing season. Horticulture production is forecast to lift in the first half of the year. This is on the back of more favourable conditions for fruit and vegetable crops. Low irrigation costs are also beneficial. Dry conditions in 2023 prompted high turn-off of sheep. This could drive declines in sheepmeat and wool production in 2024 from a smaller flock. The prospect for improved pasture growth from autumn may prove positive for livestock and dairy sectors.

Trade conditions continued to improve throughout the back half of 2023. This positive trend is expected to persist into 2024. Australia’s trade relationship with China continued to normalise in 2023. Trade barriers, including punitive anti-dumping tariffs on Australian barley exports were removed. Markets remain positive that further tariffs and trade bans on beef, wine and seafood products will be lifted in 2024. This follows increased dialogue between the two nations. Trade with India and the United Kingdom will continue to expand in 2024. The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) has now been in effect for 12 months. While the Australia-United Kingdom Free Trade Agreement (A-UKFTA) has been in place for six months. Unfortunately, trade negotiations between the EU and Australia have since collapsed. There appears little chance of talks resuming over the short term. Australia is now focused on pursuing a trade deal with the United Arab Emirates. An expansion of the AI-ECTA is also on the horizon. Volatility in global grain markets remains a concern. Above average freight costs are expected as high fuel costs offset smaller production. Though the normalisation of supply chains will further support Australian agricultural exports.

Economic headwinds will remain an ongoing challenge in the first half of the year. Strong domestic population growth is providing some assistance to the Australian economy. This is being offset by a high-rate environment, cost pressures and low consumer confidence. These factors are weighing on domestic demand for more premium agricultural products. Slower economic growth in major economies will also affect global consumption. Meanwhile, input costs are forecast to remain above long-term averages. Elevated fertiliser and diesel prices will continue to keep production costs high. These elevated costs are driven by high gas prices, volatile oil production and a low Australian dollar. Seasonal labour costs also remain high. The low unemployment rate and minimum wage awards will also keep the cost of seasonal workers elevated. This is despite improving labour supply. Which is being driven by strong migration numbers and the return of working holiday makers. A more favourable economic environment is expected to begin supporting agricultural markets in the back half of 2024.  More detailed economic commentary can be found by visiting: https://www.bendigobank.com.au/business/business-banking-hub/#insights

The analysis included in the Outlook report provides insights focused on the first half of 2024.  The report also details the key driving forces affecting agricultural markets.

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View other Australian agriculture outlook reports

  • Australian agriculture outlook 2024: Carbon & climate
    Agricultural Outlook|11 December 2023
    Carbon There are two upcoming and important developments in the carbon farming sector: a new carbon exchange, and the new Integrated Farm Method....
  • Australian agriculture outlook 2024: Cattle
    Agricultural Outlook|11 December 2023
    Australian cattle prices should trend higher during the first half of 2024 after experiencing significant declines throughout 2023
  • Australian agriculture outlook 2024: Cropping
    Agricultural Outlook|11 December 2023
    Growers across the country have faced varied challenges producing this season’s crop.

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