Australian wheat, canola and sugar were among the agricultural commodities to experience price gains in September, according to NAB’s October Rural Commodities Wrap.
Despite those gains, the NAB Rural Commodities Index (the Index) edged lower in September – down by 1.5 per cent month-on-month in Australian dollar (AUD) terms – as prices for other agricultural commodities including cattle and lamb drifted slightly down.
In US dollar (USD) terms, the Index moved a touch higher, up by 0.2 per cent, reflecting the impact of a stronger exchange rate.
The AUD strengthened in September, following the steep cut to US interest rates which put downward pressure on the ‘big dollar’, while the China stimulus announcement was also positive for sentiment.
NAB senior economist Gerard Burg says wheat prices recovered the losses recorded in August, with prices moving back up to around $330tonne by month’s end and away from three-year lows.
“Canola prices climbed strongly in late September, moving back above $700tonne,” Gerard says.
“Malting barley prices also saw some recovery across September, albeit not returning to the early August levels,” he adds.
“Sugar prices climbed dramatically in mid-September and retained these gains, sitting above $700tonne.
“ Wildfires in Brazil – the world’s largest sugar exporter – have likely had a substantial impact on the key growing region. Expanded exports from Brazil had been a key driver of the downward pressure on prices from late 2023 onwards.”
NAB has brought forward its first expected rate cut by the Reserve Bank of Australia (RBA) to February next year.
And after the AUD strengthened in September, following the steep cut to US interest rates, Gerard says NAB predicts the AUD will move up to US69c by the end of this calendar year.
However, NAB’s global economic outlook remains broadly unchanged with global growth remaining below its long-term average in the period through 2026.
“A key uncertainty at present is the impact of China’s stimulus on its economic activity and domestic demand,” Gerard explains.
“We have argued the monetary measures announced are insufficient to drive a rebound in activity and widely anticipated fiscal stimulus has so far not been announced.
“From a broader economic perspective, the US Federal Reserve joined a range of other advanced economy (AE) central banks in starting the rate cutting cycle in September, with a 50-basis point cut,” he says.
“The timing and scale of further AE central bank policy rate cuts will depend on progress on inflation and labour market trends. We have brought forward our first expected rate cut by the RBA from May 2025 to February 2025.
