Insights November 2020
Insights November 2020
This month’s report covers cattle, cropping, dairy, horticulture, sheep and wool as well as an overview of Australia’s agricultural exports to China following reports of possible suspension of exports.
The potential suspension exports to China of barley, lobster and wine would have devastating impacts for these industries in Australia due to their high reliance on China and lack of viable alternative markets to replace Chinese demand. While barley has already experienced significant impact following the introduction of an 80.5 per cent tariff in May, suspensions on wine and lobster exports would be new and severe for these industries.
Elsewhere, Australian cattle prices are expected to remain in record territory, after a six per cent rise in October took the Eastern Young Cattle Indicator (EYCI) to a record high of 822.5c/kg. Producers are continuing to restock for herd rebuilding, which will keep supply tight for the remainder of 2020.
Harvest is underway in Queensland and activity is increasing in Western Australia and South Australia, and just getting started in Victoria. Wheat farmers are also closely watching news out of China, due to unconfirmed reports that it may impose strict restrictions on Australian wheat imports.
In dairy, wet conditions in Eastern Australia have compounded the already damp conditions on farm and led to interruptions in hay production. From an export perspective, there is likely to be some uncertainty this month as many European countries enter stricter lockdowns in response to rising COVID-19 cases.
The continued closure of international borders has meant labour shortages remain a real concern across the horticulture sector. Bananas, grapes and broccoli are expecting to see strong yields thanks to fantastic growing conditions this year while export and domestic demand remains high for Australian Hass avocados.
Australian lamb prices are expected to steadily decline for the remainder of the year, continuing the general downward trend from October. The Eastern States Trade Lamb Indicator (ESTLI) is expected to follow a similar downward trend to 2019 when the ESTLI fell by 8.5 per cent from the start of November to the end of the year.
In wool, the recovery in Australian wool prices seen during September and October could be short-lived as waning demand for the remainder of 2020 is expected to add downwards pressure to prices. The recovery of Australian wool prices was highly dependent on a recovery in woollen apparel demand in Europe and the United States which is now expected to be delayed following the resurgence of COVID-19 cases in these countries.