Aussie farmers face global threat

Global factors are the biggest potential threat to Australian farmers in 2019.

The Australian Agriculture Outlook prepared by Rabobank indicates it will potentially be a decent year for Australian agriculture, with improved production conditions offsetting what we expect will be somewhat less favourable market conditions.

RaboResearch head Tim Hunt says the biggest concern is the risk of a major global event such as a slowdown in the Chinese economy, a no-deal Brexit, a US-China trade war and the result of an anti-dumping probe by China into Australian barley exports.'

Given our reliance on China, the obvious concern is three of the four factors cited involve our major trading partner and they're variables Rabobank can't yet calculate.

"If we see a return to something approaching average rainfall in 2019, our base case suggests that 2019 will bring a decent year for Australian agriculture – with improved production conditions offsetting what we expect will be somewhat less favourable market conditions," he says.

"Also, a weak and falling currency, combined with strong local price basis, is ensuring exceptionally high AUD prices for many key agricultural commodities."

Hunt says wheat prices will come under pressure during the second half of this year but the local crop should see above-average demand as the larder is restocked.

The outlook for grain and oilseed crops is generally positive, with the exception of barley.
Dairy farmers will also face pressure on margins but there are hopes for a better pasture season in 2019-'20.

Beef production is expected to be lower though prices will hold, while lamb prices are also expected to stay high as production eases after a high slaughter year in 2018. Demand for wool is uncertain.

A projected decline in production in Thailand, India, and the EU should see a steady upside for sugar prices.

Production challenges for cotton and Chinese imports spell a positive price outlook amid a global trade war.

Wine's stellar expansion is expected to slow this year as global factors bring potential downside to export values.

Rabobank projects the growth in land prices will continue during 2019, primarily supported by a low number of properties for sale and continued strong demand from buyers with long-term growth strategies.