CANBERRA: National Australia Bank (NAB) Agribusiness has revised down its Australian dollar (AUD) forecast to be at 70 US cents by the end of year and to bottom out in Q1 2016 at 68 US cents (previously 71 US cents). The revision in NAB’s August Rural Commodities Wrap is in light of the recent depreciation of the Chinese Yuan, combined with the likely continuation of weak terms of trade.
General Manager of NAB Agribusiness Khan Horne said the expectation that the Australian currency will continue to weaken is good news for Australian agricultural producers and exporters.
“The AUD’s downward trend accelerated in August with the People’s Bank of China’s devaluation of the Yuan, combined with risks to the growth outlook in China.The continued weakness of the AUD means valuable support for local prices well into 2016,” Mr Horne said.
In the August Rural Commodities Wrapreport, NAB also revised up beef price forecasts to average 40 per cent higher than in 2014-15.
“There are signs that declining beef slaughter is likely to continue owing to a shortage of stock, which means the upside for prices is as high as it has ever been,” Mr Horne said.
“Our outlook for the beef industry is strong, with confidence underpinned by solid global fundamentals and strong beef prices in the year ahead.”
The Eastern Young Cattle Indicator (EYCI) continues its upward climb in record territory, breaking through the 550AUc/kg mark in late July to now stand at 564AUc/kg. Overall, the EYCI was up 9.5 per cent in July.
The NAB Rural Commodities Index rose a further 4.1 per cent in AUD terms in July, supported by a lower dollar and higher beef, fruit, domestic wheat and sugar prices. Overall the index was down 0.4 per cent in USD terms.
NAB’s Rural Commodities Index includes 28 commodities (wheat, barley, sorghum, rice, oats, canola, chick peas, field peas, lupins, wool, cotton, sugar, wine grapes, beef, lamb, pork, poultry, dairy, apples, bananas, oranges, mangoes, strawberries, broccoli, carrots, lettuce, potatoes and tomatoes). The index is weighted annually according to the gross value of production of each industry in Australia
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