The report says the NAB Rural Commodities Index fell 4.6 per cent in September and is now 34 per cent below the peak in rural prices back in June 2022.
Cattle was the key driver of the decline in the Index, with the Eastern Young Cattle Indicator plunging 21 per cent month-on-month in September and falling further in early October.
NAB senior economist Gerard Burg said the formal declaration of an El Niño event and associated challenging seasonal conditions is driving volatility in rural commodity prices.
“Various reports suggest that low confidence due to current and upcoming seasonal conditions may have encouraged producers to sell off stock, driving cattle prices lower,” Mr Burg said.
“Last month was the driest September on record with rainfall almost 71 per cent below average and the third hottest. The Bureau of Meteorology’s outlook for both October and November look extremely dry in most regions of the country.
“El Niño is associated with hotter and drier conditions across eastern and northern Australia, which is likely to negatively impact a range of key agricultural regions and Australian crop production in coming months.”
Mr Burg said Australian wheat prices edged higher in September, moving back above $400/tonne for the first time since March.
“Barley prices have continued their upward trend since early August, boosted by the removal of Chinese tariffs on imports from Australia, while the dry conditions in coming months are likely to impact crop yields, meaning further upside risk to feed grain prices more generally.
“Following on from a period of relative price stability between February and August 2023, feed grain prices moved considerably higher in September, increasing by 2.7 per cent month-on-month.
“Canola prices dipped in month average terms in September but have continued to fluctuate close to $700/tonne.”
