ANZ commodity report shows agriculture holding up well

Panic buying has given agriculture a short-term boost but the longer term outlook is not as good as global markets contract.

ANZ’s latest commodity report reveals Australia’s agriculture sector is faring better than other industries as ‘panic buying’ from consumers during the coronavirus pandemic boosted products including wheat, grains and beef.

Some segments have been adversely affected though, including the wine, seafood and wool industries that rely heavily on China. The impact of the pandemic has interrupted these normally promising export markets at one of the busiest times of the year.

Key findings of the report show grain and oil seed prices getting a short-term bump due to the effects of panic buying but that bucks a trend of longer-term price declines.

Cattle prices had already been at record levels due to Chinese demand and cattle operations looking to re-stock so the sector was due for a correction but, once again, panic buying postponed that inevitable decline.

Sheep producers did not share in the panic buying spoils and prices are down across all sectors of the sheep industry. Wool prices were particularly hit with demand all but evaporating globally.

Anyone thinking of taking to drink would be making a wise move with the wine industry showing resilience coming out of drought. Domestic wine sales are rising and the industry is seeing increased sale values on lower volumes, a trend ANZ attributes to the premiumisation of the industry.

Cotton prices continue to sag as supply outstrips demand for the current season and business sentiment turns negative, particularly in China.

Dairy is holding up well thanks to the perceived health benefits of dairy products but demand and prices in the US have plunged with the closure of restaurants and the National School Lunch Program.

Sugar has been thrown an unexpected curve ball with the recent plunge in oil prices meaning huge Brazilian sugar volumes have been diverted from domestic ethanol production onto world markets to depress prices.