June 15, 2007

Tight supplies to push higher prices for Australian beef and wheat

Tighter supplies of beef and wheat despite improved seasonal conditions may push the commodities' price higher in 2007/2008, according to Commodity Price Outlook for June prepared by National Australia Bank (NAB).

Beef prices are forecast to increase heading into 2007-08, as turnoff rates decline and producers look to rebuild drought depleted herds. Lower output is also seen to contribute to the increased prices for the wool and dairy industries.

Wheat prices are also forecast to remain high in the coming year, as increased supplies are counterbalanced by robust world demand.

The continued strength of Australian dollar will certainly drag rural exports and its industries, with the NAB forecasting the A$ to remain around 84US¢ for the remainder of the year. Rural prices are forecast to ease back following 2007-08.